REG - Ashmore Group Plc - Half-year Report
07/02/2024 07:00
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RNS Number : 2444C Ashmore Group PLC 07 February 2024
Ashmore Group plc
7 February 2024
Results for the six months ended 31 December 2023
Ashmore Group plc (Ashmore, the Group), the specialist Emerging Markets asset
manager, today announces its unaudited results for the six months ended 31
December 2023.
- Financial performance reflects stronger markets but lower average AuM levels
- Assets under management (AuM) of US$54.0 billion(1). Positive performance of
US$2.6 billion and net outflows of US$4.5 billion, with higher performance and
improved net flows in Q2 versus Q1.
- Adjusted net revenue of £93.4 million, 13% lower YoY reflecting 10% lower
average AuM and reduced FX gains, partially offset by higher performance fees
of £8.0 million.
- Adjusted operating costs increased by 13% YoY, with variable remuneration
accrued at 27.5% of EBVCT. Fixed staff and other operating costs increased 8%
YoY and 2% HoH.
- Adjusted EBITDA of £42.6 million is 33% lower YoY and delivered a margin of
46%.
- Seed capital gains of £19.6 million and interest income of £12.8 million.
- Profit before tax increased 38% YoY to £74.5 million.
- Diluted EPS increased 39% to 8.5 pence, and on an adjusted basis fell by 27%
to 5.7 pence.
- The Board has declared an unchanged interim dividend of 4.8 pence per share.
- Consistent outperformance across broad range of strategies
- Strong Emerging Markets index returns of +5% to +7% over the six months.
- Ashmore's active investment management continues to deliver outperformance:
61% of AuM is outperforming over one year, 56% over three years and 62% over
five years.
- Consistent implementation of long-term growth strategy
- Investors' current underweight levels represent a meaningful opportunity to
increase institutional and retail allocations.
- Diversifying through growth in equities and alternatives capital raising.
- Ashmore's local asset management platforms delivering strong AuM growth and an
increasing proportion of group profits.
- Positive outlook; emerging countries in sound economic positions, underpinning
attractive returns
- Emerging Markets GDP growth expected to be three times faster than the
developed world, all regions delivering superior growth.
- Inflation challenges successfully addressed by emerging countries, many
central banks now cutting rates.
- End of Fed tightening cycle implies a weaker US dollar supporting Emerging
Markets returns.
Commenting on the Group's results, Mark Coombs, Chief Executive Officer,
Ashmore Group said:
"Emerging Markets have continued to perform strongly over the six months, and
the factors driving this performance - superior growth, effective monetary
policies and a weaker US dollar as the Fed reaches the end of its tightening
cycle - look set to underpin further increases in asset prices in 2024.
Although there are risks, particularly geopolitical ones in a year of many
elections around the world and continued growth headwinds in China, there is a
compelling argument for a shift in asset allocations from heavily indebted and
relatively expensive Developed Markets to the Emerging Markets where many of
the economies are sound, fiscal and monetary policies are sensible, and
absolute and relative valuations are attractive. Ashmore continues to deliver
outperformance for clients across a broad range of strategies and is well
positioned to capitalise on increasing capital flows as investors recognise
the superior risk-adjusted returns available in Emerging Markets."
1. As reported on 15 January 2024.
Analysts briefing
There will be a presentation for sell-side analysts at 9.00am on 7 February
2024 at FTI Consulting, 200 Aldersgate Street, London, EC1A 4HD. A copy of the
presentation will be made available on the Group's website at
ir.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
ir@ashmoregroup.com
FTI Consulting
Neil Doyle +44 (0)7771 978 220
Iona Biggart +44 (0)7971 989 065
ashmore@fticonsulting.com
Chief Executive Officer's report
Emerging Markets performed well over the six months, delivering returns of
between 5% and 7%, continuing the strong returns delivered since late 2022.
Emerging Markets fixed income outperformed developed world equivalents, and
equities delivered positive returns as markets increasingly believe the Fed
has reached the end of its tightening cycle and emerging countries are
delivering economic stability.
Against this backdrop, Ashmore's AuM fell slightly over the six-month period
from US$55.9 billion to US$54.0 billion. This period comprises two contrasting
quarters with lower market levels and risk aversion influencing performance
and flows in Q1, followed by a strong rally and an improvement in net flows
delivering AuM growth in Q2. In aggregate over the six months, positive
investment performance added US$2.6 billion to AuM and there were net outflows
of US$4.5 billion, resulting in average AuM being 10% lower than the prior
year period.
The Group's operational performance reflects this lower average AuM with
adjusted EBITDA declining by 33% compared with the prior year period. However,
profit before tax increased by 38% to £74.5 million due to strong gains
delivered by the Group's active seed capital investment programme and higher
interest income achieved on the Group's cash balances.
Many emerging countries enter 2024 with sound economic positions, superior
growth, falling interest rates, and attractive valuations across equity and
fixed income markets. Continuing absolute and relative performance by Emerging
Markets assets this year is expected to stimulate capital flows as allocations
recover from underweight levels.
Based on the Group's performance over the six-month period, the Group's strong
financial position, cash generation, and the near-term outlook, the Board has
maintained the interim dividend at 4.8 pence per share.
Reconciling items:
£m H1 2024 Seed capital- FX translation H1 2024 H1 2023
Reported
(gains)/losses
(gains)/losses
Adjusted
Adjusted
Net management fees 82.6 - - 82.6 98.0
Performance fees 8.0 - - 8.0 3.7
Other revenue 1.7 - - 1.7 1.3
Foreign exchange gains 2.2 - (1.1) 1.1 4.7
Net revenue 94.5 - (1.1) 93.4 107.7
Net losses on investment securities (12.4) 12.4 - - -
Third-party interests' share of losses in consolidated funds 5.5 (5.5) - - -
Personnel expenses (38.6) - 0.3 (38.3) (33.5)
Other expenses excluding depreciation and amortisation (13.3) 0.8 - (12.5) (11.0)
EBITDA 35.7 7.7 (0.8) 42.6 63.2
EBITDA margin 38% - - 46% 59%
Depreciation and amortisation (1.5) - - (1.5) (1.7)
Operating profit 34.2 7.7 (0.8) 41.1 61.5
Finance income 40.1 (27.3) - 12.8 6.5
Share of profit from associate 0.2 - - 0.2 0.3
Profit before tax 74.5 (19.6) (0.8) 54.1 68.3
Diluted EPS (p) 8.5 (2.7) (0.1) 5.7 7.8
Market review
Emerging Markets fixed income indices delivered positive returns over the six
months, with sovereign indices increasing by 5% to 7% and outperforming global
bond markets, and corporate debt also returning 5%. Emerging Markets equities
rose by 5%, compared with 7% for Developed Markets equities.
The sections below briefly describe the performance in each of the main asset
classes for the period.
External debt
The external debt market is well-established, large (US$1.6 trillion of bonds
outstanding), highly diversified (69 countries), and 50% of the index bonds
are rated investment grade.
Over the six months to 31 December, the EMBI GD delivered a return of 6.7%, in
excess of the other main Emerging Markets benchmark indices and outperforming
the 4.2% return of world bonds (Bloomberg Global Aggregate index).
The EMBI GD spread of 385bps represents a yield of 7.85%, both attractive
valuations in the context of the index history and global interest rate
cycles. Historically, when the Fed funds rate was at this level in the
mid-2000s, and nominal and real 10-year Treasury yields were also at
comparable levels, the EMBI GD spread was around 200bps (and it was then a
smaller, less liquid, significantly less diverse index with only 33 countries
and a lower average credit rating). This illustrates the inefficiency of an
asset class that can be exploited by active management, and provides a
supportive backdrop for additional allocations by investors seeking attractive
risk-adjusted yields.
Local currency
The local currency government bond market is substantially larger than the
external debt market with US$17.6 trillion of bonds outstanding. Many emerging
countries are now funding in their own currency, which, together with a
broadening and deepening of local capital markets, underpins continued growth
in the investment universe.
The GBI-EM GD returned 4.6% over the six months, with a weaker US dollar
contributing to the performance. Many emerging countries have again seen the
benefits of local currency funding in this cycle, with effective policy
decisions facilitated by independent central banks, a limited tolerance of
inflation as a result of experience, and flexible exchange rates.
At the period end, the index offered a nominal yield of 6%, which compares
favourably with the 3% yield on the global bond index and with continued
disinflation in many emerging countries as a consequence of effective monetary
policy in recent years. Given the weak position of the US external accounts
after years of pro-cyclical fiscal stimulus, and as foreign investors
diversify their portfolios to other currencies, it is likely that the US
dollar will continue to weaken. Therefore, the combination of yield and
potential FX gains means local currency assets continue to offer attractive
returns.
Corporate debt
Similar to its sovereign counterpart, the corporate debt market primarily
comprises local currency issuance, but with higher index representation for
hard currency bonds. Of the US$19.9 trillion of outstanding corporate debt,
US$3.4 trillion is in hard currencies, of which a third is included in the
CEMBI BD benchmark index. This index is highly diversified with 728 issuers in
58 countries, and 60% of the bonds are rated investment grade.
The corporate debt index slightly underperformed sovereign markets over the
six months, with a return of 5.3%, reflecting some relative weakness in Asia
in the early part of the period before all regions rallied towards the end of
2023.
The 12-month default rate at the end of the period was 5.6%, which is higher
than the US and Europe default rates (3.3% and 2.0%, respectively), driven
primarily by the ongoing restructuring of the Chinese real estate market.
Excluding China, default rates of between 2.5% and 3.0% in other regions are
more comparable to those in the developed world markets.
Corporate debt is a highly diverse asset class and, while market performance
will inevitably be the result of events relating to specific issuers, several
factors underpin a positive outlook for returns, including relatively low net
leverage, higher spreads than US issuers with equivalent credit ratings,
attractive yields in both HY and IG asset classes, and favourable market
technicals given lower issuance and, consequently, negative net supply across
all regions in 2023.
Equities
The MSCI EM index had a positive return of 4.7% over the six-month period,
underperforming the 6.8% return delivered by Developed Markets (the MSCI World
index). China is a significant component of the MSCI EM at around 25%, and the
World index has the United States as its largest constituent (70%). Therefore,
the performance of the two countries' respective equity markets, with China
declining and the US rallying, explains the difference in index returns. Given
the stronger equity market performance of other countries and regions, the
MSCI EM ex China index returned 8.0% over the six months.
The valuation of Emerging Markets equities is at a significant discount to
developed world equities, illustrated by the MSCI EM trading on a forward PER
of 11.7x, which is a 33% discount to the MSCI World on 17.4x. The positive
economic backdrop in many emerging countries and encouraging leading
indicators, particularly in the significant technology sector, suggest a
meaningful increase in company earnings in 2024. This alone could deliver
double-digit returns in the asset class, with further performance possible
from a cyclical re-rating (in both absolute and relative terms). Furthermore,
asset allocations should reflect the historical correlation between relative
equity market performance and the GDP growth premium of Emerging Markets
compared with Developed Markets.
Market outlook
Emerging Markets asset classes performed well in 2023 and the following
factors support ongoing outperformance, and therefore an increase in investor
allocations from current underweight levels.
- Economic growth is expected to be more than three times faster in Emerging
Markets than the developed world, and with all regions delivering superior
growth, even with China continuing to face certain headwinds. For example,
consensus estimates are for average GDP growth of 4.0% in 2024 and 2025 across
the Emerging Markets, compared with 1.2% for the developed world
- Emerging Markets economies successfully addressed the challenges of inflation
as a consequence of the COVID-19 pandemic and the Ukraine war, and many
central banks are easing policy as inflation declines rapidly. Furthermore,
most Emerging Markets countries have less fiscal stimulus to unwind when
compared with the major developed economies. This economic stability provides
a solid backdrop for continued asset class performance.
- Global markets are pricing in peak Fed rates and expect looser policy in 2024.
While a 'soft landing' for the US economy may not happen, it appears likely
that the value of the US dollar has peaked and that it will continue to
depreciate, providing a boost to returns in local currency bonds and equities
and easing pressure on externally-funded countries.
A salient risk to this positive outlook for Emerging Markets is geopolitical
tension. While regrettably the wars in Ukraine and the Middle East continue,
they appear to be reflected in asset prices currently although there is the
obvious risk of local or regional escalation. Elections can also be a source
of risk and it is notable that approximately 50% of the world's population
will vote in elections in 2024; history shows that election cycles can also
provide good alpha opportunities.
Finally, in Developed Markets, in addition to the uncertainty associated with
elections, there is also the risk of a delayed impact of rapid interest rate
increases on credit quality. If it comes to pass, then there is likely to be a
more aggressive monetary policy easing cycle and/or further fiscal expansion.
Overall, the longer-term structural growth trends in Emerging Markets are
consistent, and there is a compelling argument for a shift in asset
allocations from heavily-indebted and relatively expensive Developed Markets
to the Emerging Markets where most of the economies are sound, fiscal and
monetary policies are sensible, and absolute and relative valuations are
attractive.
As asset prices have recovered over the past 15 months, Ashmore has delivered
outperformance for clients across a wide range of investment strategies and is
therefore well-positioned to capitalise on investors' recognition of the
superior risk-adjusted returns available in Emerging Markets and the
consequent capital flows as risk appetite increases.
Assets under management
As at 31 December 2023, AuM were US$54.0 billion, 3% lower over the six-month
period. The movement was attributable to net outflows of US$4.5 billion,
partially offset by positive investment performance for the six months of
US$2.6 billion. The Group delivered higher performance and improved net flows
in Q2 versus Q1.
Average AuM of US$53.3 billion over the six-month period was 10% lower than in
the same period in the prior year (H1 2023: US$58.9 billion).
Gross subscriptions of US$3.0 billion represent 5% of opening AuM, a lower
level than in the prior year period (H1 2023: US$4.3 billion, 7% of opening
AuM) as sentiment, particularly from certain developed world investors,
remained cautious given concerns over the global macroeconomic backdrop and
geopolitical tensions.
The inflows were predominantly into existing funds or mandates, with a
particular focus on local currency as investors sought to take advantage of
further US dollar weakness. There were notable new client mandates in the
equity theme, driven by the Group's local operations in Saudi Arabia and
Indonesia, and further commitments to alternatives products in Latin America.
Gross redemptions of US$7.5 billion, or 13% of opening AuM, were markedly
lower than in the prior year period (H1 2023: US$11.9 billion, 19% of opening
AuM) and include US$0.8 billion of overlay/liquidity redemptions (H1 2023:
US$1.8 billion).
Blended debt and local currency redemptions were at a significantly reduced
level compared with the prior year period. However, portfolio de-risking asset
allocation decisions by developed world investors were reflected in
redemptions in the external and corporate debt themes.
The Group's clients are predominantly a diversified set of institutions,
representing 96% of AuM, with the remainder sourced through intermediary
retail channels. Segregated accounts represent 81% of AuM (30 June 2023: 81%)
and, in line with the third phase of the Group's strategy, 36%
of the Group's AuM has been sourced from clients domiciled in Emerging
Markets (30 June 2023: 33%).
Ashmore's principal mutual fund platforms represent AuM of US$5.3 billion in
45 funds. The European SICAV range comprises 33 funds with AuM of US$4.5
billion (30 June 2023: US$4.8 billion in 31 funds) and the US 40-Act range has
12 funds with AuM of US$0.8 billion (30 June 2023: US$0.9 billion in 12
funds).
The Group's investments remain geographically diverse and broadly consistent
with recent periods, with 39% of AuM invested in Latin America, 27% in Asia
Pacific, 14% in Eastern Europe and 20% in the Middle East and Africa.
Local platforms
Ashmore's local offices continued to perform well. Total AuM increased by 12%
over the six months to US$7.8 billion, representing 14% of the Group's AuM,
driven by strong investment performance in India, alternatives capital raising
in Colombia, and new institutional funds and private equity allocations in
Saudi Arabia.
The local businesses generate 22% of the Group's net revenue and adjusted
EBITDA and, in aggregate, deliver an adjusted EBITDA margin of 45%.
Investment performance
The recovery in Emerging Markets asset prices that began in late 2022
continued through this six-month period, and was given an additional boost by
the Fed's shift to a dovish outlook. With the backdrop of 5% to 7% index
returns over the six months, Ashmore's active investment approach continued to
deliver outperformance across a broad range of fixed income and equity
strategies.
In aggregate, approximately two-thirds of Group AuM outperformed relevant
benchmarks over the period, providing for stability in the longer-term
performance picture even as periods of strong relative performance fall away.
As at 31 December 2023, 61% of AuM is outperforming over one year, 56% over
three years and 62% over five years (30 June 2023: 67%, 69% and 49%,
respectively).
As described above, many emerging countries are in a sound economic position
with good growth, falling inflation and the potential for further monetary
policy easing. When combined with attractive absolute and relative valuations
this supports further outperformance by the Emerging Markets asset classes,
and Ashmore is well-positioned to continue to deliver strong relative
performance for its clients.
AuM movements by investment theme as classified by mandate
The table below shows the development during the period of AuM by investment
theme.
Investment theme AuM Gross Gross Net flows Reclassifications Performance AuM
30 June 2023
subscriptions
redemptions
US$bn
US$bn
US$bn
31 December
US$bn
US$bn
US$bn
2023
US$bn
External debt 11.0 0.3 (2.4) (2.1) - 0.6 9.5
Local currency 18.8 1.2 (1.9) (0.7) - 0.7 18.8
Corporate debt 6.5 0.1 (1.1) (1.0) (0.4) 0.1 5.2
Blended debt 11.9 0.3 (1.1) (0.8) 0.4 0.9 12.4
Fixed income 48.2 1.9 (6.5) (4.6) - 2.3 45.9
Equities 6.2 1.0 (1.0) - - 0.3 6.5
Alternatives 1.5 0.1 - 0.1 - - 1.6
Total 55.9 3.0 (7.5) (4.5) - 2.6 54.0
The local currency investment theme includes US$6.3 billion of
overlay/liquidity AuM (30 June 2023: US$6.3 billion). The reclassification of
assets from corporate debt to blended debt occurred as a result of clients
specifying changes to performance benchmarks.
Financial review
Revenues
Lower average assets under management and reduced FX revenues, partially
offset by higher performance fees, led to an overall 14% decline in net
revenue. On an adjusted basis, excluding FX translation effects, net revenue
fell by 13% to £93.4 million.
Net revenue
H1 2024 H1 2023
£m
£m
Net management fees 82.6 98.0
Performance fees 8.0 3.7
Other revenues 1.7 1.3
FX: hedges 1.1 4.7
Adjusted net revenue 93.4 107.7
FX: balance sheet translation 1.1 2.6
Net revenue 94.5 110.3
Net management fee income declined by 16% to £82.6 million, reflecting lower
average AuM together with an average net management fee margin of 39 basis
points (H1 2023: 40 basis points) and a less favourable average GBP:US$ rate
of 1.2572 over the period (H1 2023: 1.1795). At constant H1 2023 exchange
rates, net management fee income fell by 10%.
The one basis point decline in the average net management fee margin is
attributable to the combined impact of large mandate flows, which had a
positive effect, offset by the impact of market performance in the prior year
(stronger performance in lower margin strategies) and competition and other
mix effects. There was no overall impact from investment theme mix.
Performance fees of £8.0 million were realised for the period by funds in the
local currency, equities, alternatives and blended debt themes. The proportion
of AuM eligible to earn performance fees is 24% as at 31 December 2023 (30
June 2023: 21%).
Translation of the Group's non-Sterling assets and liabilities, excluding seed
capital investments, resulted in an unrealised FX gain of £1.1 million. The
combination of hedging and active selling of US dollars for Sterling delivered
an FX gain of £1.1 million over the period. Therefore, the total FX gain for
the period recognised in revenues was £2.2 million.
Other revenues of £1.7 million were slightly higher than in the prior year
period.
Fee income and net management fee margin by investment theme
Net management fees Performance fees Net management fee margin
Investment theme H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023
£m
£m
£m
£m
bps
bps
External debt 11.1 18.0 - - 29 32
Local currency 21.1 22.1 6.9 2.5 29 28
Corporate debt 7.1 9.3 - - 32 34
Blended debt 20.4 24.9 0.1 1.1 43 44
Fixed income 59.7 74.3 7.0 3.6 33 34
Equities 13.6 15.6 0.7 - 55 60
Alternatives 9.3 8.1 0.3 0.1 161 148
Total 82.6 98.0 8.0 3.7 39 40
Operating costs
Total operating costs of £53.4 million include £0.8 million of expenses
incurred by seeded funds that are required to be consolidated under IFRS 10.
On an adjusted basis, taking into account the impact of seed capital and the
proportion of the variable remuneration accrual that relates to FX translation
gains, operating costs increased by 13% compared with the prior year period.
Adjusted operating costs increased by 16% at constant H1 2023 exchange rates.
Operating costs
H1 2024 H1 2023
£m
£m
Staff costs (16.1) (15.6)
Other operating costs (12.5) (11.0)
Depreciation and amortisation (1.5) (1.7)
Operating costs before VC (30.1) (28.3)
Variable compensation (VC) (22.5) (18.5)
VC accrual on FX gains/losses 0.3 0.6
Adjusted operating costs (52.3) (46.2)
Consolidated funds costs (0.8) (0.6)
Add back VC on FX gains/losses (0.3) (0.6)
Total operating costs (53.4) (47.4)
Staff costs of £16.1 million were 3% higher compared with the prior year
period as a result of the full period impact of wage inflation in certain
jurisdictions. The Group's headcount fell from 316 to 310 over the six months,
and the average headcount for the period was 315 (H1 2023: 317).
Other operating costs, excluding consolidated fund expenses and depreciation
and amortisation, increased by £1.5 million year-on-year to £12.5 million
and were broadly in line with the run-rate in the second half of the prior
financial year. The principal factors behind the year-on-year increase were
additional data and inflation in other IT-related costs, and higher legal and
professional fees.
In this period, variable remuneration has been accrued at 27.5% of EBVCT,
which includes interest income and net realised seed capital gains on a
life-to-date basis. This resulted in a charge of £22.5 million for the
six-month period (H1 2023: £18.5 million).
Adjusted EBITDA
Consistent with the lower level of average AuM and higher operating costs,
adjusted EBITDA reduced by 33% to £42.6 million, delivering an adjusted
EBITDA margin of 46%.
Finance income
Net finance income of £40.1 million (H1 2023: £14.8 million) includes
profits relating to seed capital investments, which are described in more
detail below. Excluding such profits, net interest income for the period of
£12.8 million increased compared with the prior year period (H1 2023: £6.5
million) due to higher yields achieved on the Group's cash deposits.
Seed capital
The table below summarises the principal IFRS items in the accounts to assist
in understanding the financial impact of the Group's seed capital programme on
profits. The Group's seed capital investments generated realised gains of
£3.1 million (£4.4 million on a life-to-date basis) and an unrealised
mark-to-market gain of £16.5 million to give a total gain of £19.6 million
for the six months.
Impact of seed capital investments on profits
H1 2024 H1 2023
£m
£m
Consolidated funds (note 15):
Net losses on investment securities (12.4) (40.8)
Third-party interests' share 5.5 16.6
Operating costs (0.8) (0.6)
Investment income 7.7 7.6
Sub-total: consolidated funds - (17.2)
Unconsolidated funds (note 7):
Market return 16.8 2.0
FX 2.8 (1.3)
Sub-total: unconsolidated funds 19.6 0.7
Total seed capital gains/(losses) 19.6 (16.5)
- realised 3.1 0.8
- unrealised 16.5 (17.3)
Profit before tax
The fall in adjusted EBITDA was more than offset by mark-to-market gains on
the Group's seed capital investments and higher interest income, to deliver a
38% increase in profit before tax to £74.5 million.
Taxation
The geographic mix of profits in the period together with the impact of the
Group's share price on the allowable value of share-based remuneration
provided to employees mean that the effective tax rate of 19.2% for the period
(H1 2023: 17.7%) is lower than the prevailing effective UK corporation tax
rate of 25.0%. 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 current effective tax rate, based on its geographic mix of profits
and prevailing tax rates, is approximately 21% to 22%.
Earnings per share
Basic earnings per share for the period increased by 33% to 8.7 pence (H1
2023: 6.5 pence) and diluted earnings per share increased by 39% from 6.1
pence to 8.5 pence.
On an adjusted basis, excluding the effects of FX translation, seed
capital-related items and relevant tax, diluted earnings per share were 27%
lower at 5.7 pence (H1 2023: 7.8 pence).
Capital
As at 31 December 2023, following the payment of the final ordinary dividend
in respect of FY2023, total equity attributable to shareholders of the parent
was £867.1 million (31 December 2022: £898.7 million; 30 June 2023: £898.8
million).
The Board has determined that the level of capital required to support the
Group's activities, including its regulatory requirements, is £80.6 million.
As at 31 December 2023, the Group had total capital resources of £671.0
million, equivalent to 94 pence per share, and representing an excess of
£590.4 million over the level of required capital.
Cash
Ashmore's business model delivers a high conversion rate of operating profits
to cash. Based on operating profit of £34.2 million for the period (H1 2023:
£38.7 million), the Group generated £39.0 million of cash from operations
(H1 2023: £45.7 million). The operating cash flows after excluding
consolidated funds represent 94% of the adjusted EBITDA for the period of
£42.6 million (H1 2023: 73%).
Cash and deposits by currency
31 December 30 June
2023
2023
£m
£m
Sterling 296.7 374.0
US dollar 121.6 71.1
Other 34.1 33.5
Total 452.4 478.6
Excluding cash held in consolidated funds, the Group's cash and deposits
declined by £22.4 million over the six-month period to £445.9 million (30
June 2023: £468.3 million), and the mix is slightly less biased to Sterling,
reflecting the payment of the final ordinary dividend and cash variable
remuneration in respect of the prior financial year.
Seed capital investments
The Group's seed capital programme has delivered growth in third-party AuM,
with nearly US$6 billion of AuM in funds that have been seeded, representing
11% of current Group AuM.
During the six-month period, while there was no significant new investment
activity, the Group realised £22.6 million from previous investments.
Including the impact of FX in OCI, the total unrealised mark-to-market gain on
the portfolio was £18.5 million, meaning that the market value of the Group's
seed capital investments was substantially unchanged at £288.3 million as at
31 December 2023 (30 June 2023: £291.5 million).
Profitable recycling of seed investments was achieved through distributions
from funds in the alternatives theme, together with realisations of
investments in local currency and equities funds.
The mark-to-market increase in value was the result of the broad-based
strength in equity and fixed income markets over the period, partially offset
by a small reduction in the value of alternatives assets.
Ashmore has seed capital commitments to funds of £9.7 million that were
undrawn at the period end, giving a total value for the Group's seed capital
programme of approximately £300 million.
Seed capital market value by currency
31 December 30 June
2023
2023
£m
£m
US dollar 234.1 240.1
Colombian peso 22.1 19.7
Other 32.1 31.7
Total market value 288.3 291.5
Approximately two-thirds 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.
Shares held by the EBT
The Group's EBT purchases and holds shares in anticipation of the vesting of
share awards. As at 31 December 2023, the EBT owned 49,154,371 ordinary
shares (30 June 2023: 50,834,683 ordinary shares), representing 6.9% of the
Group's issued share capital (30 June 2023: 7.1%).
Foreign exchange
The Group receives the majority of its fee income 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 OCI.
Movements in the GBP:US$ and other exchange rates over the period reduced net
management fees by 6%, increased adjusted operating costs by 3%, and resulted
in a translation gain in net revenue of £1.1 million on the Group's foreign
currency assets and liabilities and a £2.8 million mark-to-market gain on the
Group's unconsolidated seed capital investments.
Dividend
The Board's policy is to pay a progressive ordinary dividend over time, taking
into consideration factors such as the financial performance over the period,
the Group's strong financial position, cash generation and the near-term
outlook.
Accordingly, the Board has declared an interim dividend of 4.8 pence per share
(H1 2023: 4.8 pence per share), which will be paid on 2 April 2024 to all
shareholders on the register on 1 March 2024.
Mark Coombs
Chief Executive Officer
6 February 2024
Risk management
A detailed description of Ashmore's risk management function and internal
control framework, which provides a process for identifying, evaluating, and
managing the Group's emerging and principal risks, was included in the Risk
management section of the 2023 Annual Report and Accounts, together with a
list of principal risks and examples of associated controls and mitigants.
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 period ended 31 December 2023
Notes Unaudited Unaudited Audited
6 months to
6 months to
12 months to
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
Management fees 83.7 99.1 185.4
Performance fees 8.0 3.7 5.1
Other revenue 1.7 1.3 2.7
Total revenue 5 93.4 104.1 193.2
Distribution costs (1.1) (1.1) (2.2)
Foreign exchange gains 6 2.2 7.3 5.4
Net revenue 94.5 110.3 196.4
Net losses on investment securities 15 (12.4) (40.8) (44.3)
Third-party interests' share of losses in consolidated funds 15 5.5 16.6 19.3
Personnel expenses (38.6) (34.1) (66.2)
Other expenses (14.8) (13.3) (27.8)
Operating profit 34.2 38.7 77.4
Finance income 7 40.1 14.8 33.9
Share of profit from associate 0.2 0.3 0.5
Profit before tax 74.5 53.8 111.8
Tax expense 9 (14.3) (9.5) (25.3)
Profit for the period 60.2 44.3 86.5
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 (4.6) 0.1 (26.2)
Cash flow hedge intrinsic value gains - 2.1 4.9
Other comprehensive income/(loss), net of related tax effect (4.6) 2.2 (21.3)
Total comprehensive income for the period 55.6 46.5 65.2
Profit attributable to:
Equity holders of the parent 58.2 42.7 83.3
Non-controlling interests 2.0 1.6 3.2
Profit for the period 60.2 44.3 86.5
Total comprehensive income attributable to:
Equity holders of the parent 53.7 45.3 62.7
Non-controlling interests 1.9 1.2 2.5
Total comprehensive income for the period 55.6 46.5 65.2
Earnings per share
Basic 10 8.65p 6.48p 12.43p
Diluted 10 8.47p 6.09p 12.15p
Interim Condensed Consolidated Statement of Financial Position
As at 31 December 2023
Notes Unaudited Unaudited Audited
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
Assets
Non-current assets
Goodwill and intangible assets 12 86.6 91.7 86.9
Property, plant and equipment 13 5.6 7.8 6.5
Investment in associates 2.5 2.3 2.3
Non-current financial assets measured at fair value 15 67.8 37.6 54.1
Deferred acquisition costs 0.2 0.4 0.3
Deferred tax assets 21.7 29.6 23.9
184.4 169.4 174.0
Current assets
Investment securities 15 229.3 230.6 229.9
Financial assets measured at fair value 15 36.3 40.6 55.8
Trade and other receivables 66.7 80.0 70.4
Cash and deposits 16 452.4 489.0 478.6
784.7 840.2 834.7
Total assets 969.1 1,009.6 1,008.7
Equity and liabilities
Capital and reserves - attributable to equity holders of the parent
Issued capital 18 0.1 0.1 0.1
Share premium 15.6 15.6 15.6
Retained earnings 848.2 852.1 875.4
Foreign exchange reserve 3.2 33.7 7.7
Cash flow hedging reserve - (2.8) -
867.1 898.7 898.8
Non-controlling interests 14.0 20.9 14.2
Total equity 881.1 919.6 913.0
Liabilities
Non-current liabilities
Lease liabilities 13 3.0 4.6 3.7
Deferred tax liabilities 9.0 8.7 9.3
12.0 13.3 13.0
Current liabilities
Lease liabilities 13 2.0 2.2 2.1
Derivative financial instruments - 2.9 0.2
Third-party interests in consolidated funds 15 51.8 54.5 56.2
Trade and other payables 22.2 17.1 24.2
76.0 76.7 82.7
Total liabilities 88.0 90.0 95.7
Total equity and liabilities 969.1 1,009.6 1,008.7
Interim Condensed Consolidated Statement of Changes in Equity
For the six months period ended 31 December 2023
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 30 June 2022 0.1 15.6 901.0 33.2 (4.9) 945.0 21.8 966.8
Profit for the period - - 42.7 - - 42.7 1.6 44.3
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations - - - 0.5 - 0.5 (0.4) 0.1
Cash flow hedge intrinsic value gains - - - - 2.1 2.1 - 2.1
Total comprehensive income - - 42.7 0.5 2.1 45.3 1.2 46.5
Transactions with owners:
Purchase of own shares - - (15.6) - - (15.6) - (15.6)
Share-based payments - - 8.8 - - 8.8 - 8.8
Dividends to equity holders - - (84.8) - - (84.8) - (84.8)
Dividends to non-controlling interests - - - - - - (2.1) (2.1)
Total contributions and distributions - - (91.6) - - (91.6) (2.1) (93.7)
Unaudited balance at 31 December 2022 0.1 15.6 852.1 33.7 (2.8) 898.7 20.9 919.6
Profit for the period - - 40.6 - - 40.6 1.6 42.2
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations - - - (26.0) - (26.0) (0.3) (26.3)
Cash flow hedge intrinsic value gains - - - - 2.8 2.8 - 2.8
Total comprehensive income/(loss) - - 40.6 (26.0) 2.8 17.4 1.3 18.7
Transactions with owners:
Share-based payments - - 9.7 - - 9.7 - 9.7
Movements in non-controlling interests - - 6.6 - - 6.6 (6.8) (0.2)
Dividends to equity holders - - (33.6) - - (33.6) - (33.6)
Dividends to non-controlling interests - - - - - - (1.2) (1.2)
Total contributions and distributions - - (17.3) - - (17.3) (8.0) (25.3)
Audited balance at 30 June 2023 0.1 15.6 875.4 7.7 - 898.8 14.2 913.0
Profit for the period - - 58.2 - - 58.2 2.0 60.2
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations - - - (4.5) - (4.5) (0.1) (4.6)
Total comprehensive income/(loss) - - 58.2 (4.5) - 53.7 1.9 55.6
Transactions with owners:
Purchase of own shares - - (12.0) - - (12.0) - (12.0)
Share-based payments - - 12.5 - - 12.5 - 12.5
Dividends to equity holders - - (85.9) - - (85.9) - (85.9)
Dividends to non-controlling interests - - - - - - (2.1) (2.1)
Total contributions and distributions - - (85.4) - - (85.4) (2.1) (87.5)
Unaudited balance at 31 December 2023 0.1 15.6 848.2 3.2 - 867.1 14.0 881.1
INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months period ended 31 December 2023
Unaudited Unaudited Audited
6 months to
6 months to
12 months to
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
Operating activities
Profit after tax 60.2 44.3 86.5
Adjustments for non-cash items:
Depreciation and amortisation 1.6 1.7 3.2
Share-based payments 12.6 9.0 18.9
Foreign exchange gains (2.2) (7.3) (5.4)
Net losses on investment securities 6.9 24.2 25.0
Finance income (40.1) (14.8) (33.9)
Tax expense 14.3 9.5 25.3
Share of profit from associate (0.2) (0.3) (0.5)
Cash generated from operations before working capital changes 53.1 66.3 119.1
Changes in working capital:
(Increase)/decrease in trade and other receivables (11.9) 1.0 9.7
Increase in derivative financial instruments (0.2) (2.3) (5.0)
Decrease in trade and other payables (2.0) (19.3) (12.2)
Cash generated from operations 39.0 45.7 111.6
Taxes paid (9.8) (11.3) (7.1)
Net cash from operating activities 29.2 34.4 104.5
Investing activities
Interest and investment income received 23.7 15.8 31.2
Investment in term deposits (32.3) - -
Purchase of non-current financial assets measured at fair value (0.9) (1.2) (19.5)
Purchase of financial assets measured at fair value - (8.3) (23.0)
Sale/(purchase) of investment securities 11.5 (1.3) 3.2
Sale of non-current financial assets measured at fair value 3.3 2.6 5.0
Sale of financial assets measured at fair value 7.5 - -
Net cash on initial consolidation of seed capital investments 5.0 - (1.7)
Purchase of property, plant and equipment (0.2) (0.2) (0.4)
Net cash generated from/(used in) investing activities 17.6 7.4 (5.2)
Financing activities
Dividends paid to equity holders (85.9) (84.8) (118.4)
Dividends paid to non-controlling interests (2.1) (2.1) (3.3)
Third-party subscriptions into consolidated funds 4.0 2.5 2.8
Third-party redemptions from consolidated funds (2.8) (6.3) (29.1)
Distributions paid by consolidated funds (5.4) (3.2) (4.2)
Decrease in non-controlling interests - - (0.4)
Payment of lease liabilities (1.1) (1.1) (2.2)
Interest paid (0.1) (0.2) (0.3)
Purchase of own shares (12.0) (15.6) (15.6)
Net cash used in financing activities (105.4) (110.8) (170.7)
Net decrease in cash and cash equivalents (58.6) (69.0) (71.4)
Cash and cash equivalents at the beginning of the period 478.6 552.0 552.0
Effect of exchange rate changes on cash and cash equivalents 0.1 6.0 (2.0)
Cash and cash equivalents at the end of the period (note 16) 420.1 489.0 478.6
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) General information
These interim condensed consolidated financial statements of Ashmore and its
subsidiaries (the Group) for the six months period ended 31 December 2023 were
authorised for issue by the Directors on 6 February 2024.
Ashmore 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 UK-adopted International Accounting Standard 34 (IAS 34)
Interim Financial Reporting and the DTR of the 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 2023, which were prepared in accordance
with UK-adopted international accounting standards and in conformity with the
requirements of the Companies Act.
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 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 2023 which are available on the Group's website. Those statutory
accounts were approved by the Board of Directors on 5 September 2023 and have
been filed with Companies House. The auditors' opinion on those accounts was
unmodified, did not contain an Emphasis of Matter paragraph and did not
contain a statement made under Section 498 of the Companies Act.
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 interim 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 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.
Principal 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 2023.
3) New accounting standards and interpretations
The Group did not implement the requirements of any standards or
interpretations that were in issue but were not required to be adopted by the
Group at the half year. No other standards or interpretations issued and not
yet effective are expected to have an impact on the Group's interim
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 £42.6 million for the period as reconciled in the Financial
review (H1 2023: adjusted EBITDA of £63.2 million was derived by adjusting
operating profit by £1.7 million of depreciation and amortisation expense,
£24.8 million losses related to seed capital and £2.0 million of foreign
exchange gains). The disclosures below are supplementary, and provide the
location of the Group's non-current assets at period end other than financial
assets 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
2023
2022
2023
£m
£m
£m
United Kingdom and Ireland 23.8 26.1 24.3
United States 69.4 74.0 69.8
Other 1.7 2.1 1.9
Total non-current assets 94.9 102.2 96.0
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 2023: none;
FY2023: none).
Analysis of revenue by geography
6 months to 6 months to 12 months to
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
United Kingdom and Ireland 66.7 76.7 142.3
United States 4.9 7.9 13.7
Other 21.8 19.5 37.2
Total revenue 93.4 104.1 193.2
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 to
6 months to
12 months to
31 December
31 December
30 June
31 December
31 December
30 June
2023
2022
2023
2023
2022
2023
US dollar 1.2748 1.2029 1.2714 1.2572 1.1795 1.2079
Euro 1.1540 1.1271 1.1653 1.1593 1.1572 1.1523
Indonesian rupiah 19,628 18,726 19,061 19,309 17,976 18,259
Colombian peso 4,939 5,833 5,309 5,075 5,394 5,519
Foreign exchange gains are shown below.
6 months to 6 months to 12 months to
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
Net realised and unrealised hedging gains 1.1 4.7 4.4
Translation gains on non-Sterling denominated monetary assets and liabilities 1.1 2.6 1.0
Total foreign exchange gains 2.2 7.3 5.4
7) Finance income
6 months to 6 months to 12 months to
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
Interest and investment income 20.6 14.3 27.2
Net realised gains on seed capital investments measured at fair value 3.1 0.8 2.4
Net unrealised gains/(losses) on seed capital investments measured at fair 16.5 (0.1) 4.6
value
Interest expense on lease liabilities (note 13) (0.1) (0.2) (0.3)
Total finance income 40.1 14.8 33.9
Included within interest and investment income is interest earned on cash
deposits of £12.9 million (H1 2023: £6.7 million; FY2023: £16.2 million)
and investment income of £7.7 million (H1 2023: £7.6 million; FY2023: £11.0
million) on consolidated funds (note 15c).
Included within net realised and unrealised gains on seed capital investments
totalling £19.6 million are £2.0 million gains on financial assets measured
at FVTPL (note 15a), £15.9 million gains on non-current financial assets
measured at fair value (note 15b) and £1.7m realised gains on disposal of
consolidated funds (note 15c).
8) Share-based payments
The cost related to share-based payments recognised by the Group in the
interim condensed consolidated statement of comprehensive income is shown
below:
6 months to 6 months to 12 months to
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
Omnibus Plan 13.5 8.8 17.4
Phantom Bonus Plan 0.1 0.2 0.1
Total share-based payments expense 13.6 9.0 17.5
The total expense recognised for the period in respect of equity-settled
share-based payment awards was £12.5 million (H1 2023: £8.8 million; FY2023:
£18.5 million), of which £0.7 million relates to share awards granted to key
management personnel (H1 2023: £0.3 million; FY2023: £0.4 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
2023
2022
2023
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 39,389,867 40,688,833 40,688,833
Granted 16,374,823 11,598,953 11,598,953
Vested (7,708,290) (9,321,863) (10,905,117)
Forfeited (418,725) (905,008) (1,992,802)
Outstanding at the end of the period 47,637,675 42,060,915 39,389,867
Cash-settled awards
At the beginning of the period 276,542 271,302 271,302
Granted 146,461 117,749 117,749
Vested (56,104) (112,509) (112,509)
Forfeited - - -
Outstanding at the end of the period 366,899 276,542 276,542
Total awards
At the beginning of the period 39,666,409 40,960,135 40,960,135
Granted 16,521,284 11,716,702 11,716,702
Vested (7,764,394) (9,434,372) (11,017,626)
Forfeited (418,725) (905,008) (1,992,802)
Outstanding at the end of the period 48,004,574 42,337,457 39,666,409
The weighted average share price of awards granted to employees under the
Omnibus Plan during the period was £1.91 (H1 2023: £2.14; FY2023: £2.14),
as determined by reference to the average Ashmore 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 statement of financial position is £0.3 million (H1
2023: £0.4 million; FY2023: £0.3 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
2023
2022
2023
£m
£m
£m
Current tax
UK corporation tax on profits for the period 6.9 0.6 5.6
Overseas corporation tax charge 5.5 6.5 10.5
Adjustments in respect of prior periods - - 0.1
12.4 7.1 16.2
Deferred tax
Origination and reversal of temporary differences 1.9 2.4 9.1
Tax expense for the period 14.3 9.5 25.3
Factors affecting tax charge for the period
6 months to 6 months to 12 months to
31 December
31 December
30 June
2023
2022
2023
£m
£m
£m
Profit before tax 74.5 53.8 111.8
Profit on ordinary activities multiplied by the prevailing UK tax rate for the 18.6 11.0 22.9
period of 25% (H1 2023: 20.5%; FY2023: 20.5%)
Effects of:
Non-deductible expenses 1.3 0.2 7.4
Deduction in respect of vested shares (Part 12, Corporation Tax Act 2009) (1.6) (1.8) -
Different rate of taxes on overseas profits (2.6) (0.3) (3.2)
Non-deductible investment returns (1.4) - (1.9)
Adjustments in respect of prior periods - 0.4 0.1
Tax expense for the period 14.3 9.5 25.3
10) Earnings per share
Basic earnings per share for the six months to 31 December 2023 of 8.65 pence
(H1 2023: 6.48 pence; FY2023: 12.43 pence) is calculated by dividing the
profit after tax for the financial period attributable to equity holders of
the parent of £58.2 million (H1 2023: £42.7 million; FY2023: £83.3 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 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.
The weighted average number of shares used in calculating basic and diluted
earnings per share are shown below.
6 months to 6 months to 12 months to
31 December 2023
31 December
30 June
Number of ordinary shares
2022
2023
Number of ordinary shares
Number of ordinary shares
Basic weighted average number of shares 672,573,896 658,713,326 670,224,113
Diluted weighted average number of shares 686,977,809 700,943,298 685,760,649
11) Dividends
Dividends paid
Company 6 months to 6 months to 12 months to
31 December 2023
31 December 2022
30 June
£m
£m
2023
£m
Final dividend for FY2023: 12.10p (FY2022: 12.10p) 85.9 84.8 84.8
Interim dividend for FY2023: 4.80p - - 33.6
85.9 84.8 118.4
In addition, the Group paid £2.1 million (H1 2023: £2.1 million; FY2023:
£3.3 million) in dividends to non-controlling interests.
Dividends declared/proposed
Company 6 months to 6 months to 12 months to
31 December 2023
31 December 2022
30 June
pence
pence
2023
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
2023 of 4.80 pence per share payable on 2 April 2024 to shareholders on the
register on 1 March 2024.
12) Goodwill and intangible assets
Goodwill Fund management intangible assets Total
£m
£m
£m
Cost (at original exchange rate)
At 31 December 2023, 31 December 2022 and 30 June 2023 70.4 0.9 71.3
Accumulated amortisation
At 30 June 2022 - (0.5) (0.5)
Amortisation charge for the period - (0.1) (0.1)
At 31 December 2022 - (0.6) (0.6)
Amortisation charge for the period - (0.1) (0.1)
At 30 June 2023 - (0.7) (0.7)
Amortisation charge for the period - - -
At 31 December 2023 - (0.7) (0.7)
Net book value
At 30 June 2022 90.5 0.4 90.9
Accumulated amortisation for the period - (0.1) (0.1)
FX revaluation through reserves(*) 0.9 - 0.9
At 31 December 2022 91.4 0.3 91.7
Accumulated amortisation for the period - (0.1) (0.1)
FX revaluation through reserves(*) (4.7) - (4.7)
At 30 June 2023 86.7 0.2 86.9
Accumulated amortisation for the period - - -
FX revaluation through reserves(*) (0.3) - (0.3)
At 31 December 2023 86.4 0.2 86.6
* 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 the business from
ANZ in 1999 and subsidiaries in subsequent periods.
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 2023, no factors indicating potential
impairment of goodwill were noted. Based on the calculation as at 31 December
2023 using a market share price of £2.23, 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 as at 31 December 2023 comprise fund management contracts
recognised by the Group on the acquisition of Ashmore Avenida Investments
(Real Estate) LLP in July 2018.
13) Property, plant and equipment
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
2023
2022
2023
£m
£m
£m
Property, plant and equipment owned by the Group 1.1 1.4 1.2
Right-of-use assets 4.5 6.4 5.3
Total property, plant and equipment 5.6 7.8 6.5
Lease liabilities are presented in the interim condensed consolidated
statement of financial position as follows:
31 December 2023 31 December 2022 30 June
£m
£m
2023
£m
Current 2.0 2.2 2.1
Non-current 3.0 4.6 3.7
Total lease liabilities 5.0 6.8 5.8
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 30 June 2022 7.6 8.0
Lease payments - (1.3)
Interest expense - 0.2
Depreciation charge (1.1) -
Foreign exchange revaluation through reserves (0.1) (0.1)
At 31 December 2022 6.4 6.8
Additions 0.2 0.1
Lease payments - (1.2)
Interest expense - 0.1
Depreciation charge (1.3) -
At 30 June 2023 5.3 5.8
Additions 0.2 0.3
Lease payments - (1.2)
Interest expense - 0.1
Depreciation charge (1.0) -
At 31 December 2023 4.5 5.0
Total cash outflow included within financing activities in the interim
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 2023.
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 valuation committee assesses
and documents the evidence obtained from the third parties to support such
valuations.
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 2023 At 31 December 2022 At 30 June 2023
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 114.7 87.9 26.7 229.3 104.8 99.0 26.8 230.6 112.3 88.8 28.8 229.9
Financial assets at FVTPL - 36.3 - 36.3 - 40.6 - 40.6 - 55.8 - 55.8
Non-current financial assets - 26.9 40.9 67.8 - - 37.6 37.6 - 14.9 39.2 54.1
Total financial assets 114.7 151.1 67.6 333.4 104.8 139.6 64.4 308.8 112.3 159.5 68.0 339.8
Financial liabilities
Third-party interests in consolidated funds 34.1 7.8 9.9 51.8 34.7 10.1 9.7 54.5 36.0 9.6 10.6 56.2
Derivative financial instruments - - - - - 2.9 - 2.9 - 0.2 - 0.2
Total financial liabilities 34.1 7.8 9.9 51.8 34.7 13 9.7 57.4 36.0 9.8 10.6 56.4
The Group recognises transfers into and transfers out of fair value hierarchy
levels as at the end of the reporting period. There were no transfers between
level 1, level 2 and level 3 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 2023, 31 December 2022 and 30 June 2023.
Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the period.
Investment securities Non-current financial Third-party interests in consolidated
£m
assets
funds
£m
£m
At 31 December 2022 26.8 37.6 9.7
Additions - 1.7 -
Disposals (1.3) (2.2) (0.6)
Unrealised gains recognised in finance income 3.7 2.2 1.5
Unrealised losses recognised in foreign exchange reserve (0.4) (0.1) -
At 30 June 2023 28.8 39.2 10.6
Additions - 0.9 1.2
Disposals (7.6) (3.3) (3.2)
Unrealised gains recognised in finance income 5.3 3.9 1.3
Unrealised gains recognised in foreign exchange reserve 0.2 0.2 -
At 31 December 2023 26.7 40.9 9.9
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 2023.
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 2023 and 30 June 2023, and the associated sensitivity to
changes in unobservable inputs to a reasonable alternative:
Asset class and valuation technique Fair value at Significant Range of estimates Sensitivity factor Change in
31 December 2023
unobservable input
fair value
£m
£m
Unquoted securities
Market multiple and discount 17.7 EBITDA multiple 15x +/- 1x +/- 0.6
Marketability adjustment 30%-37% +/- 5% -/+ 1.9
Discounted cash flow 18.5 Discount rate 10%-18% +/- 1% -/+ 1.2
Marketability adjustment 30%-54% +/- 5% -/+ 2.1
Unquoted funds
Net assets approach 31.4 Net asset value 1x +/- 5% +/- 1.6
Total level 3 investments 67.6
Asset class and valuation technique Fair value at Significant Range of estimates Sensitivity factor Change in
30 June 2023
unobservable input
fair value
£m
£m
Unquoted securities
Market multiple and discount 6.4 EBITDA multiple 15x +/- 1x +/- 0.6
Marketability adjustment 30% +/- 5% -/+ 0.7
Discounted cash flow 32.3 Discount rate 10%-17% +/- 1% -/+ 3.0
Marketability adjustment 10%-54% +/- 5% -/+ 2.8
Unquoted funds
Net assets approach 29.3 Net asset value 1x +/- 5% +/- 1.5
Total level 3 investments 68.0
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
a) Financial assets measured at fair value through profit or loss
Financial assets measured at FVTPL at 31 December 2023 comprise shares held in
debt and equity funds as follows:
31 December 2023 31 December 30 June
£m
2022
2023
£m
£m
Equity funds 22.7 15.1 29.6
Debt funds 13.6 25.5 26.2
Financial assets measured at fair value 36.3 40.6 55.8
Included within finance income are net gains of £2.0 million (H1 2023: net
gains of £0.2 million; FY2023: net gains of £2.6 million) on the Group's
financial assets measured at FVTPL.
b) 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.
31 December 2023 31 December 30 June
£m
2022
2023
£m
£m
Alternative funds 40.5 34.9 36.5
Debt funds 26.9 - 14.9
Non-current financial assets measured at fair value(1) 67.4 34.9 51.4
1. Excludes £0.4 million of other non-current financial assets measured at
fair value that are not classified as seed capital (31 December 2022: £2.7
million; 30 June 2023: £2.7 million).
Included within finance income are net gains of £15.9 million (H1 2023: net
losses of £0.2 million; FY2023: net gains of £1.4 million) on the Group's
non-current financial assets measured at fair value.
c) Consolidated funds
The Group has consolidated 18 investment funds as at 31 December 2023 (31
December 2022: 18 investment funds; 30 June 2023: 17 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 2023 31 December 30 June
£m
2022
2023
£m
£m
Investment securities(1) 229.3 230.6 229.9
Cash and cash equivalents 6.5 8.2 10.3
Other(2) 0.7 1.0 0.3
Third-party interests in consolidated funds (51.8) (54.5) (56.2)
Consolidated seed capital investments 184.7 185.3 184.3
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 or unconsolidated funds financially.
Included within the interim condensed consolidated statement of comprehensive
income are £nil gains (H1 2023: net losses of £17.2 million; FY2023: net
losses of £15.3 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 2023 31 December 30 June
£m
2022
2023
£m
£m
Investment income 7.7 7.6 11.0
Net losses on investment securities (12.4) (40.8) (44.3)
Change in third-party interests in consolidated funds 5.5 16.6 19.3
Audit fees (0.1) (0.1) (0.2)
Other expenses (0.7) (0.5) (1.1)
Net gains/(losses) on consolidated funds - (17.2) (15.3)
Included within finance income are realised gains of £1.7 million (H1 2023:
realised gains of £0.7 million; FY2023: realised gains of £3.0 million) on
disposal of consolidated funds.
Included in the Group's cash generated from operations is £1.2 million cash
utilised in operations (H1 2023: £0.5 million cash utilised in operations;
FY2023: £0.1 million cash utilised in operations) relating to consolidated
funds.
As at 31 December 2023, the Group's consolidated funds were domiciled in
Guernsey, Luxembourg, Indonesia, Saudi Arabia and the United States.
16) Cash and deposits
31 December 2023 31 December 30 June
£m
2022
2023
£m
£m
Cash at bank and in hand 50.2 51.1 40.9
Daily dealing liquidity funds 103.9 78.0 56.8
Short-term deposits 266.0 359.9 380.9
Cash and cash equivalents 420.1 489.0 478.6
Term deposits 32.3 - -
Total cash and deposits 452.4 489.0 478.6
Term deposits are fixed term interest-yielding cash investments with an
original maturity of greater than three months. Term deposits have an average
annual interest rate of 5.9% and average remaining maturity term of ten
months.
17) 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 and Accounts for the year ended 30 June
2023, 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 2023.
18) Share capital
Authorised share capital
Number of Nominal value
shares
£'000
Ordinary shares of 0.01p each at 31 December 2023, 30 June 2023 and 31 900,000,000 90
December 2022
Issued share capital - allotted and fully paid
Number of Nominal value
shares
£'000
Ordinary shares of 0.01p each at 31 December 2023, 30 June 2023 and 31 712,740,804 71
December 2022
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 2023, there were equity-settled share awards issued under
the Omnibus Plan totalling 47,637,675 shares (31 December 2022: 42,060,915
shares; 30 June 2023: 39,389,867 shares) that have release dates ranging from
September 2024 to September 2028.
19) Own shares
The Trustees of The Ashmore 2004 Employee Benefit Trust (EBT) acquire and hold
shares in Ashmore with a view to facilitating the vesting of share awards. As
at 31 December 2023, the EBT owned 49,154,371 (31 December 2022: 52,936,626;
30 June 2023: 50,834,683) ordinary shares of 0.01p with a nominal value of
£4,915 (31 December 2022: £5,294; 30 June 2023: £5,083) and shareholders'
funds are reduced by £149.8 million (31 December 2022: £171.2 million; 30
June 2023: £164.2 million) in this respect. The EBT is periodically funded by
the Company for these purposes.
20) 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
2023
2022
2023
£m
£m
£m
Short-term benefits 0.3 0.3 0.8
Defined contribution pension costs - - -
Share-based payment benefits 0.7 0.3 0.4
1.0 0.6 1.2
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.
Aggregate key management personnel interests in consolidated funds at 31
December 2023 were £39.2 million (31 December 2022: £49.2 million; 30 June
2023: £44.5 million). During the period, there were no other transactions
entered into with key management personnel (H1 2023 and FY2023: none).
Transactions with Ashmore funds
During the period, the Group received £27.1 million of gross management fees
and performance fees (H1 2023: £36.1 million; FY2023: £64.0 million) from
the 96 funds (H1 2023: 101 funds; FY2023: 104 funds) it manages and which are
classified as related parties. As at 31 December 2023, the Group had
receivables due from funds of £5.4 million (31 December 2022: £6.2 million;
30 June 2023: £4.6 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
consolidated within the results of the Group. As at 31 December 2023, the loan
outstanding was £149.2 million (31 December 2022: £164.4 million; 30 June
2023: £150.7 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
£0.3 million to the Foundation during the period to 31 December 2023 (H1
2023: £0.3 million; FY2023: £0.5 million).
21) Commitments
The Group has undrawn investment commitments relating to seed capital
investments as follows:
As at As at As at
31 December
31 December
30 June
2023
2022
2023
£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 5.6 6.3 5.7
Fondo Ashmore Andino III - FCP 3.8 - 3.0
Ashmore KCH HealthCare Fund II - 0.4 -
Ashmore KCH HealthCare LLC - 4.4 -
Total undrawn investment commitments 9.6 11.3 8.9
22) Contingent assets and liabilities
The Company and its subsidiaries can be party to legal claims arising in the
normal course of business. The Directors do not anticipate that the outcome of
any such proceedings and claims will have a material adverse effect on the
Group's financial position and at present there are no such claims where their
financial impact can be reasonably estimated. There are no other material
contingent assets or liabilities.
23) Post-balance sheet events
There are no post-balance sheet events that require adjustment or disclosure
in these interim condensed consolidated financial statements.
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 being an indication of important events that have occurred during
the first six months of the financial year and their impact on the interim
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 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
6 February 2024
independent REVIEW REPORT TO ASHMORE GROUP PLC
Conclusion
We have been engaged by the Ashmore Group Plc and its subsidiaries (together
'the Group') to review the interim condensed set of consolidated financial
statements in the half-yearly financial report for the six months period ended
31 December 2023, which comprises the interim condensed consolidated statement
of comprehensive income, interim condensed consolidated statement of financial
position, interim condensed consolidated statement of changes in equity,
interim condensed consolidated cash flow statement and the related explanatory
notes (1 to 23). We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months period ended 31 December 2023
is not prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' (ISRE) issued by the Financial
Reporting Council. 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.
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.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of consolidated financial statements included in this
half-yearly financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'.
Conclusions relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting, or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Group a conclusion on the condensed set of consolidated financial statements
in the half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for conclusion paragraph of
this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Group in accordance with guidance contained
in International Standard on Review Engagements 2410 (UK) 'Review of Interim
Financial Information Performed by the Independent Auditor of the Entity'
issued by the Financial Reporting Council. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we have formed.
Ernst & Young LLP
London
6 February 2024
Alternative performance measures
Ashmore discloses alternative performance measures (APMs) to assist
shareholders' understanding of the Group's operational performance during the
accounting period and to allow consistent comparisons with prior periods.
The calculation of APMs is consistent with the financial year ended 30 June
2023. 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 interim 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 2024 H1 2023
£m
£m
Total revenue CSCI 93.4 104.1
Distribution costs CSCI (1.1) (1.1)
Foreign exchange CSCI 2.2 7.3
Net revenue 94.5 110.3
Net management fees
The principal component of the Group's revenues is management fees, net of
associated distribution costs, earned on AuM.
Reference H1 2024 H1 2023
£m
£m
Management fees CSCI 83.7 99.1
Distribution costs CSCI (1.1) (1.1)
Net management fees 82.6 98.0
Net management fee margin
The net management fee margin is defined as the ratio of annualised net
management fees to average AuM 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 average AuM excludes assets where fees are not recognised in
revenues, for example AuM related to associates and joint ventures. The margin
is a principal measure of the firm's revenue generating capability and is a
commonly used industry performance measure.
H1 2024 H1 2023
Net management fee income (US$m) 103.7 114.9
Average assets under management (US$bn) 52.8 58.3
Net management fee margin (bps) 39 40
Variable compensation ratio
The variable compensation ratio is defined as the charge for VC as a
proportion of earnings before variable compensation and tax (EBVCT). 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 VC is a component of personnel expenses and comprises share-based
payments and performance-related cash bonuses, and has been accrued in the
interim accounts at 27.5% of EBVCT (H1 2023: 20.0%; FY2023: 21.6%).
EBVCT is profit before tax excluding the charge for VC, charitable donations,
share of profit from associate and unrealised seed capital-related items, and
including net seed capital gains realised in the period on a life-to-date
basis. The unrealised seed capital items are gains or losses on investment
securities, third-party interests' share of gains/losses in consolidated
funds, expenses in respect of consolidated funds and net unrealised gains or
losses in finance income. In prior periods, the VC ratio excluded interest
income and seed capital-related items.
Reference H1 2024 H1 2023
£m
£m
Profit before tax CSCI 74.5 53.8
Remove: CSCI, note 15 (19.6) 16.5
Seed capital-related (gains)/losses
Share of profit from associate CSCI (0.2) (0.3)
Variable remuneration 22.5 18.5
Charitable donations 0.3 0.3
Add:
Realised seed capital gains 4.4 3.6
EBVCT 81.9 92.4
Adjusted net revenue, adjusted operating costs and adjusted EBITDA
Adjusted figures exclude items relating to FX translation and seed capital.
This provides an alternative view of performance, excluding the volatility
associated with those items, which is used by management to assess the Group's
operating performance.
Earnings before interest, tax, depreciation and amortisation (EBITDA) provides
a view of the operating performance of the business before certain non-cash
items, financing income and charges, and taxation.
Reference H1 2024 H1 2023
£m
£m
Net revenue CSCI 94.5 110.3
Remove:
FX translation (gains)/losses Note 7 (1.1) (2.6)
Adjusted net revenue 93.4 107.7
Reference H1 2024 H1 2023
£m
£m
Personnel expenses CSCI (38.6) (34.1)
Other expenses CSCI (14.8) (13.3)
Remove:
Other expenses in consolidated funds Note 15 0.8 0.6
Add:
VC % on FX translation Note 7 0.3 0.6
Adjusted operating costs (52.3) (46.2)
Reference H1 2024 H1 2024
£m
£m
Operating profit CSCI 34.2 38.7
Remove:
Depreciation & amortisation 1.5 1.7
EBITDA 35.7 40.4
Remove:
FX translation Note 7 (1.1) (2.6)
Seed capital-related (gains)/losses CSCI, note 15 7.7 24.8
VC % on FX translation Note 7 0.3 0.6
Adjusted EBITDA 42.6 63.2
Adjusted EBITDA margin
The ratio of adjusted EBITDA to adjusted net revenue. 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 FX translation and seed
capital, as described above, and the related tax impact.
Reference H1 2024 H1 2023
pence
pence
Diluted EPS CSCI 8.5 6.1
Remove:
FX translation Note 7 (0.1) (0.3)
Tax on FX translation - 0.1
Seed capital-related (gains)/losses CSCI, note 7, note 15 (2.9) 2.3
Tax on seed capital-related items 0.2 (0.4)
Adjusted diluted EPS 5.7 7.8
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 2024 H1 2023
£m
£m
Cash generated from operations Consolidated cash flow statement 39.0 45.7
Remove:
Cash flows relating to consolidated funds Note 15 1.2 0.5
Operating cash flow 40.2 46.2
Adjusted EBITDA 42.6 63.2
Conversion of operating profits to cash 94% 73%
Capital resources
Ashmore has calculated its capital resources in a manner consistent with the
Investment Firms Prudential Regime (IFPR). Note that goodwill and intangible
assets include associated deferred tax liabilities and deferred acquisition
costs, and foreseeable dividends relate to the declared interim dividend of
4.8 pence per share.
Reference 31 December 2023 30 June 2023
£m
£m
Total equity Balance sheet 867.1 898.8
Deductions:
Unaudited profits CSCI (58.2) -
Goodwill and intangible assets (79.3) (80.0)
Deferred tax assets Balance sheet (21.7) (23.9)
Foreseeable dividends Note 11 (34.0) (85.1)
Investments in financial sector entities (2.9) (5.0)
Capital resources 671.0 704.8
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