TIDMASHM
RNS Number : 6577F
Ashmore Group PLC
24 February 2015
Ashmore Group plc
24 February 2015
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDING 31 DECEMBER
2014
Ashmore Group plc (Ashmore, the Group), the specialist Emerging
Markets asset manager, announces today its unaudited interim
results for the six months ending 31 December 2014.
Highlights
-- Assets under management (AuM) at 31 December 2014 of US$63.7
billion (30 June 2014: US$75.0 billion)
-- 56% of AuM outperforming benchmarks over three years with
attractive near-term return opportunities
-- Net revenues increased 22% to GBP164.0 million (H1 2013/14: GBP134.6 million)
- net management fees of GBP133.0 million (H1 2013/14: GBP149.8
million), 11% lower following 8% decline in average AuM
- performance fees of GBP7.0 million (H1 2013/14: GBP0.7 million)
- benefits of stronger US dollar generated foreign exchange
gains of GBP21.4 million (H1 2013/14: GBP18.5 million loss)
-- Business model continues to deliver high adjusted EBITDA margin of 67% (H1 2013/14: 67%)
- adjusted EBITDA, excluding seed capital and foreign exchange
translation, of GBP96.3 million (-7% YoY)
- continued cost discipline with operating costs excluding
variable remuneration reduced by 4% YoY
-- Strong cash generation from operations of GBP95.1 million
-- Statutory profit before tax increased 37% to GBP110.7 million (H1 2013/14: GBP80.8 million)
-- Diluted earnings per share increased 28% to 11.5p (H1 2013/14: 9.0 p)
- foreign exchange translation effects increased diluted EPS by approximately 2p
-- An interim dividend of 4.55p per share to be paid on 10 April 2015 (H1 2013/14: 4.45p)
Commenting on the results, Mark Coombs, Chief Executive Officer
of Ashmore Group plc, said:
"Ashmore's profit before tax improved by 37% to GBP110.7
million, despite challenging market conditions that led to an 8%
decline in average AuM. This was achieved through rigorous control
of operating costs, higher performance fees, and the benefits of a
stronger US dollar that offset the decline in management fee
income.
"Sentiment towards the Emerging Markets asset class is being
dictated by macro factors to the exclusion of country or
company-specific fundamentals. While this has had a short-term
impact on asset prices and hence performance, particularly in the
last quarter, it provides a favourable backdrop for Ashmore's
value-based investment processes to establish positions in order to
enhance returns over the longer-term. Indeed, Emerging Markets
offer substantial absolute and relative value with fixed income
spreads wider than at any time since the onset of the global
financial crisis, and appreciable real yield differentials compared
with Developed Markets. Emerging Markets equities continue to offer
attractive value given they trade at a substantial discount to
Developed Markets on a forward price/earnings basis.
"In 2015, we expect Emerging Markets to continue to pursue
beneficial reforms, make cyclical adjustments, and sustain
flexibility in policy making, made possible due to their attractive
growth profiles and distinct advantages over Developed Markets in
that indebtedness and inflation are both at favourable levels.
While US monetary tightening is perceived to be a headwind, markets
have had nearly two years to adjust to the prospect and Emerging
Markets asset prices reflect higher US rate expectations than are
likely to be achieved this year. Furthermore, continued loose
monetary policy in Japan and the ECB's decision to undertake
quantitative easing over the next 18 months are expected to support
assets with attractive yields.
"After a period of volatile asset prices but resilience in
economic and political fundamentals, Emerging Markets offer
attractive near-term returns. Ashmore has experienced and acted
upon such value opportunities for clients in the past, and is
well-equipped to do so again in this cycle."
Analysts briefing
There will be a presentation for analysts at 09.00 on 24
February 2015 at the offices of Goldman Sachs International at
Peterborough Court, 133 Fleet Street, London EC4A 2BB. 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
Andrew Walton +44 (0)20 3727 1514
Paul Marriott +44 (0)20 3727 1341
Chief Executive Officer's report
During the six months ending 31 December 2014, Ashmore continued
to make progress in broadening its distribution capabilities and in
expanding the Group's footprint in the Emerging Markets. The market
environment was volatile, but the ongoing disciplined and rigorous
implementation of the Group's long-standing investment processes
sought to take advantage of mispricing opportunities, and reported
profits benefited from the strength of the US dollar through
foreign exchange translation effects.
Net revenue of GBP164.0 million (H1 2013/14: GBP134.6 million)
increased 22% as a result of higher performance fees and foreign
exchange gains of GBP21.4 million (H1 2013/14: GBP18.5 million
loss) that primarily reflects the effect of US dollar strength on
the value of the Group's non-Sterling assets and liabilities. Net
management fee income declined 11% to GBP133.0 million (H1 2013/14:
GBP149.8 million) with average AuM 8% lower than in the prior year
period.
Given the impact of foreign exchange translation effects, for
this period adjusted EBITDA is defined to reclassify these effects
together with the results of consolidated funds. Adjusted EBITDA
for the period was GBP96.3 million (H1 2013/14: GBP104.1 million),
and resulted in an adjusted EBITDA margin of 67% (H1 2013/14:
67%).
The Group's profit before tax of GBP110.7 million increased from
GBP80.8 million in the prior year period. Basic earnings per share
were 12.0 pence (H1 2013/14: 9.4 pence) and the Board has declared
an increased dividend of 4.55 pence per share (H1 2013/14: 4.45
pence), reflecting increased earnings, the Group's strong capital
position and the Board's confidence in the business.
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
clarity and comprehension of the Group's operating performance, and
to provide a more meaningful comparison with the prior period.
Reclassification of
====================================
Seed
H1 2014/15 capital-related Foreign exchange H1 2014/15 H1 2013/14
Statutory items translation Adjusted Adjusted
==================== ================== ================= ================= ================== ==================
Net revenues 164.0 - (20.1) 143.9 155.1
Investment
securities and
third-party
interests (3.5) 3.5 - - -
Operating
expenses(1) (52.8) 1.2 4.0 (47.6) (51.0)
==================== ================== ================= ================= ================== ==================
EBITDA 107.7 4.7 (16.1) 96.3 104.1
EBITDA margin 66% 67% 67%
Depreciation &
amortisation (2.3) - - (2.3) (2.5)
==================== ================== ================= ================= ================== ==================
Operating profit 105.4 4.7 (16.1) 94.0 101.6
Net finance
income/(expense) 6.5 (4.0) (1.7) 0.8 0.3
Associates & joint
ventures (1.2) - - (1.2) (0.7)
Seed capital-related
items - (0.7) - (0.7) 9.3
Acquisition-related
items - - - - 0.4
==================== ================== ================= ================= ================== ==================
Profit before tax
excluding FX
translation - - - 92.9 110.9
==================== ================== ================= ================= ================== ==================
Foreign exchange
translation - - 17.8 17.8 (30.1)
==================== ================== ================= ================= ================== ==================
Statutory profit
before tax 110.7 - - 110.7 80.8
==================== ================== ================= ================= ================== ==================
1. For the purposes of presenting 'Adjusted' profits, operating
expenses in H1 2014/15 and H1 2013/14 have been adjusted for the
20% accrual relating to variable compensation on foreign exchange
translation gains and losses.
AuM development
Assets under management declined by US$11.3 billion, or 15%,
during the six months as a result of net outflows of US$4.5
billion, negative investment performance of US$6.2 billion, and a
reduction of US$0.6 billion relating to the disposal of the Group's
30% interest in a Chinese real estate joint venture. Average AuM of
US$71.2 billion were 8% lower compared with the same period in the
prior year.
Gross subscriptions were US$5.3 billion (H1 2013/14: US$7.3
billion) with demand continuing to be broadly spread across client
types and geographies. By investment theme, the Group experienced
ongoing demand for local currency, blended debt and corporate debt
products, and also continued interest in the specialist products
within the equities theme.
Redemptions were US$9.8 billion (H1 2013/14: US$10.2 billion) or
14% of average AuM (H1 2013/14: 13%). Redemptions remained at a
similar level to the prior year period due to a small number of
relatively large withdrawals from blended debt, equities and
overlay/liquidity segregated accounts. The average net management
fee margins on these redemptions were below the averages for the
respective themes.
Investment performance
Over three and five years, 56% and 37% of AuM are outperforming
relevant benchmarks, respectively (30 June 2014: 81% and 92%,
respectively). While the five year number is weaker, this partly
reflects the relatively low number of funds in the analysis, and of
the 63% that are underperforming benchmarks, nearly all (90%) are
within 50bps of the benchmark performance.
Detailed analysis of each of the investment themes is provided
in the Market review below, but in summary the value bias of
Ashmore's investment processes has led to weaker external debt
performance as a result of mark-to-market effects on high
conviction positions given the market volatility experienced at
this point in the cycle, and this has also had an effect on blended
debt. Local currency, corporate debt and equities have sustained
strong relative performance over three and five years.
Over one year, there has been a notable improvement in local
currency performance relative to benchmarks, with 89% of AuM
outperforming as at 31 December 2014 (30 June 2014: 62%, 31
December 2013: 1%). However, external debt and corporate debt funds
experienced a weaker period, such that the proportion of Group AuM
outperforming benchmarks remains at 22% (30 June 2014: 23%).
AuM movements by investment theme as classified by mandate
The development during the period of AuM by theme as classified
by mandate is shown in the following table.
AuM at
AuM at Gross Gross 31 December
30 June 2014 subscriptions redemptions Net flows Disposal Performance 2014
Investment theme US$bn US$bn US$bn US$bn US$bn US$bn US$bn
================== ============= =============== =============== ========= ======== =========== ===============
External debt 14.0 0.4 (1.2) (0.8) - (0.8) 12.4
Local currency 17.3 1.8 (1.2) 0.6 - (2.2) 15.7
Corporate debt 8.2 0.7 (0.6) 0.1 - (0.9) 7.4
Blended debt 20.6 1.5 (2.5) (1.0) - (1.6) 18.0
Equities 6.1 0.6 (2.2) (1.6) - (0.2) 4.3
Alternatives 2.5 - (0.4) (0.4) (0.6) (0.2) 1.3
Multi-strategy 2.7 0.1 (0.6) (0.5) - (0.2) 2.0
Overlay/liquidity 3.6 0.2 (1.1) (0.9) - (0.1) 2.6
================== ============= =============== =============== ========= ======== =========== ===============
Total 75.0 5.3 (9.8) (4.5) (0.6) (6.2) 63.7
================== ============= =============== =============== ========= ======== =========== ===============
AuM % by investment theme as classified by mandate and as
invested
The following table reports AuM 'as invested' by underlying
asset class, which adjusts from the 'by mandate' presentation to
reflect the allocation to underlying asset classes of the
multi-strategy and blended debt themes, and the cross-over
investment by certain external debt funds.
AuM at 30 June 2014 AuM at 31 December 2014
======================================= =======================================
Classified Classified Classified Classified Classified Classified
by mandate as invested as invested by mandate as invested as invested
Investment theme % % US$bn % % US$bn
================== =========== ============ ============ =========== ============ ============
External debt 19 30 22.8 19 36 22.7
Local currency 23 32 23.9 25 31 19.5
Corporate debt 11 19 14.4 12 18 11.8
Blended debt 27 - - 28 - -
Equities 8 10 7.1 7 8 5.0
Alternatives 3 4 3.2 2 3 2.0
Multi-strategy 4 - - 3 - -
Overlay/liquidity 5 5 3.6 4 4 2.7
================== =========== ============ ============ =========== ============ ============
Total 100 100 75.0 100 100 63.7
================== =========== ============ ============ =========== ============ ============
Market review
The financial year started positively in Emerging Markets, with
many of the sources of uncertainty that had previously weighed on
sentiment steadily being resolved. The heavy electoral cycle was
largely complete, with broadly favourable outcomes in the major
countries; some of the geopolitical risks were receding; and the
timing of the first US interest rate rise was being pushed back in
investors' minds. However, since the middle of September, some of
those factors have returned and been joined by new concerns, such
as falling commodity prices, particularly oil, and the notable
strength of the US dollar. While the impact is not uniform, with a
range of outcomes across the more than 60 Emerging Markets
countries that Ashmore invests in, this has had the effect of
weakening sentiment towards Emerging Markets and leading to
widespread weakness in asset prices, notwithstanding the fact that
some of these factors, such as a lower oil price, are beneficial to
many Emerging Markets. Against this backdrop, we discuss below the
performance and outlook for each of the Group's eight investment
themes.
External debt Local currency Corporate debt Blended debt
============================ ============================== ========================= ========================
Invests in debt Invests in local Invests in debt Mandates specifically
instruments issued currency-denominated instruments issued combine external,
by sovereigns (governments) instruments issued by public and private local currency and
and quasi-sovereigns by sovereign, quasi-sovereign sector corporate corporate debt measured
(government-sponsored). and corporate issuers issuers. against tailor-made
as well as local blended indices.
currencies.
============================ ============================== ========================= ========================
Equities Alternatives Overlay/liquidity Multi-strategy
============================ ============================== ========================= ========================
Offers exposure Invests mainly in Separates and centralises Dynamic asset allocation
to global Emerging corporate restructurings the currency risk across all investment
Markets equities through distressed of an underlying themes.
trends, complemented debt, private and Emerging Markets
by a range of specialist public equity and asset class in order
equity funds with equity-linked securities. to manage it effectively
a country, region and efficiently.
or small cap focus.
============================ ============================== ========================= ========================
External debt
The benchmark EMBI GD index was resilient and fell only 1.1%
during the six month period. Investment grade assets outperformed
high yield, generating positive returns of 1.6% against a 5.9%
decline in HY assets, and the index spread over the 10 year US
Treasury yield widened by 84bps to 353bps. With 62 countries in the
index, there is a wide range of available returns, for example
between the Philippines (+6%) and Venezuela (-41%), over the six
months.
External debt AuM decreased by US$1.6 billion during the six
months, comprising net outflows of US$0.8 billion and negative
investment performance of US$0.8 billion. High conviction positions
in countries such as Russia, where asset prices fell as sentiment
deteriorated during the period, caused some mark-to-market
underperformance against the benchmark index, and a bias towards
higher yielding and longer duration assets also detracted from
relative performance.
External debt valuations are attractive compared with historical
levels: the 350bps spread over US Treasuries is 30% wider than at
the onset of the financial crisis and twice as wide as the record
low of 169bps, and the EMBI GD index yields nearly 6%. As was seen
periodically in 2014, the inefficiencies of Emerging Markets can
produce short-term underperformance, which can reverse powerfully
and rapidly when fundamentals re-assert themselves.
Local currency
The unhedged GBI-EM GD index fell 11.1% during the six months,
which is attributable to the appreciation of the US dollar against
Emerging Markets currencies, although with a wide variation in the
performance of individual currencies. Indeed, many Emerging Markets
currencies outperformed Developed Markets currencies in the period.
Ashmore's comprehensive product range provides investors with the
ability to invest across the full spectrum of local currency
sub-themes, including FX and rates, the latter returning nearly 3%
over the period. As with external debt, there was a wide dispersion
of country returns.
Ashmore's local currency AuM declined to US$15.7 billion through
net inflows of US$0.6 billion that were offset by negative
investment performance of US$2.2 billion. Relative investment
performance continued to improve during the period, as active
management and investment decisions made during the periods of
market weakness in the prior financial year contributed to
returns.
While currency performance reduced returns over the period,
Emerging Markets' substantial reserve holdings, limited
indebtedness and, in the main, orthodox central bank policies have
ensured that most countries' economic fundamentals have remained
sound. Consequently, the local currency asset class offers
attractive absolute and relative returns after the recent
volatility, with an index yield of approximately 6%. This level of
yield is consistent with significantly tighter US monetary policy,
and the relatively low correlation between local currency bonds and
US Treasury yields offers an important source of
diversification.
Corporate debt
The corporate debt asset class echoed sovereign hard currency
debt with the CEMBI BD index falling 1.3% during the six months.
Investment grade credits outperformed high yield (+0.8% against
-5.6%).
Ashmore's corporate debt AuM declined by US$0.8 billion during
the period to US$7.4 billion, with net inflows of US$0.1 billion
and negative investment performance of US$0.9 billion. Investment
performance relative to the broad benchmark was affected by the
theme's bias to high yield mandates, and deteriorating sentiment
towards markets such as Russia, compounded by the sell-off in
commodities towards the end of 2014, which had a mark-to-market
effect on bond prices.
Emerging Markets credit offers attractive value compared to both
its own history and the returns available from comparable assets in
the developed world. Credit spreads versus Developed Markets are at
the widest level since the first Eurozone debt crisis in 2011,
despite default rates declining from 3.3% to 1.7% between 2013 and
2014. Expectations for GDP growth in Emerging Markets, and a
relatively low level of indebtedness at the outset, augur well for
continued growth in the corporate debt asset class.
Blended debt
There are clear benefits to dynamically allocating across
Emerging Markets fixed income asset classes, with wide variations
in periodic returns from the broad range of available constituent
asset classes, as can be seen above. The blended debt product has a
range of bespoke client benchmarks, but for reference the standard
benchmark (50% EMBI GD, 25% GBI-EM GD, 25% ELMI+) fell 5.7% during
the period.
The Group's blended debt AuM reduced by US$2.6 billion through
negative investment performance of US$1.6 billion and net outflows
of US$1.0 billion. Outflows resulted from a small number of
relatively large segregated account withdrawals in the second
quarter. Blended debt investment performance benefited from active
management of local currency positions during the period.
Given the value apparent in Emerging Markets, and the superior
returns available from a dynamic allocation across the range of
fixed income asset classes, Ashmore expects continued demand for
blended debt products from both institutional and retail
investors.
Equities
The MSCI EM (net) index fell 7.8% during the six months, as
declines in commodity prices and currencies affected sentiment and
caused GDP growth expectations to be revised downwards.
The Group's AuM declined through a combination of negative
investment performance of US$0.2 billion and net outflows of US$1.6
billion, which were concentrated in segregated accounts invested in
the Broad Global Active (BGA) strategy. It is disappointing to
report a net outflow from the equities theme, especially given the
investment performance improvements. However, redemptions from BGA
reflect client decisions based on longer-term performance
timeframes and unfortunately outweigh the ongoing success in
attracting clients to the range of higher performing, and higher
revenue margin, specialist funds. Ashmore's focus is on selling
specialist funds, and emphasising the value bias of the BGA
strategy.
Emerging Markets equities offer compelling value at the current
time, with the volatility of the recent past highlighting many
opportunities to invest at attractive earnings or book value
multiples. Additionally, access will improve over time as evidenced
by Saudi Arabia planning to open its equity market to foreign
investors in 2015, and regulatory changes continue to facilitate
access to China, the world's largest Emerging Market.
Alternatives
The AuM decline of US$0.9 billion to US$1.3 billion is
attributable to the planned return of capital to investors
following asset realisations (US$0.3 billion) and the disposal in
November of the Group's 30% interest in a Chinese real estate joint
venture (US$0.6 billion).
The Group's share of profit or losses from the real estate joint
venture is recognised in a single line, 'Share of losses from
associates and joint ventures' in the consolidated statement of
comprehensive income. There is no impact from the disposal on the
alternatives net management fee margin, which is stated after
excluding the joint venture AuM, and the effect of the disposal on
the Group's profit before tax is immaterial.
While the majority of alternatives AuM is in funds that today
are in the realisation phase of their lives, there are attractive
opportunities in Emerging Markets to increase exposure to
locally-managed illiquid assets such as real estate and
infrastructure.
Multi-strategy
The decline in multi-strategy AuM from US$2.7 billion to US$2.0
billion is attributable to negative investment performance of
US$0.2 billion and net outflows of US$0.5 billion. The outflows
were principally due to the ongoing redemptions from Japanese
retail funds, with AuM in these funds totalling US$1.4 billion as
at 31 December 2014.
Overlay/liquidity
The theme experienced a net outflow of US$0.9 billion, through
segregated account withdrawals, and negative mark-to-market
performance of US$0.1 billion, resulting in AuM of US$2.6 billion
at the period end.
Market outlook
Ashmore enters 2015 with Emerging Markets asset prices at
attractive levels after nearly two years of challenging market
conditions. Fixed income spreads are wider than at any time since
the onset of the global financial crisis and consistent with
tighter US monetary conditions than are likely to be seen this
year. Similarly, equities continue to offer attractive value across
a broad range of Emerging and Frontier markets. This is a
favourable backdrop for Ashmore's value-based investment processes
to establish positions in order to deliver longer-term performance
for clients.
While there is understandable caution with regards to the timing
and pace of monetary tightening by the Federal Reserve, markets
have had a significant period of time in which to adjust and it
will be countered to some extent by Japan's continued loose
monetary policy and the European Central Bank's decision to
undertake quantitative easing over the next 18 months. Investors'
ongoing need for yield, combined with a structural underweight
position, is expected to support demand for Emerging Markets
assets.
A long list of Emerging Markets countries with perceived
weaknesses has been tested by higher funding costs and weak market
sentiment over the past two years, and most have responded with
adjustment, reforms, or both, thereby improving their credit
worthiness. Only a single country in the investment universe has
defaulted, and for legal reasons rather than an inability to
service its debt, which it continues to try to do. Similarly, the
decline in commodity prices since the middle of 2014, in particular
oil, has led to the typical knee-jerk reaction that this must be
uniformly bad for Emerging Markets, none of which would react with
appropriate policy measures. The reality is somewhat different,
with more than two-thirds of Emerging Markets countries
experiencing an improvement in terms of trade with lower commodity
prices, and importantly countries such as Indonesia are seizing the
opportunity to instigate sensible, beneficial reforms. While macro
uncertainty is unwelcome, it helps to maintain policymakers'
discipline in Emerging Markets and healthy carry and spreads
preserve attractive valuations.
The discrepancy between prices and Emerging Markets fundamentals
is stark after the recent market weakness. Macro uncertainties
highlight the need for specialist, active management skills and
Ashmore's value-based investment processes are well placed to seize
the near-term return opportunities on behalf of clients.
Strategy/business developments
The Group continued to broaden its range of funds during the
period, in order to provide investors with the ability to access
the full range of opportunities in the diverse Emerging Markets
universe.
In September, Ashmore took advantage of the RQFII licence it was
awarded in January 2014 to launch three China SICAV funds (equity,
fixed income and multi-strategy), providing international investors
with efficient and flexible access to the world's largest Emerging
Market. As part of this process, Ashmore became the first manager
to receive approval from the Luxembourg regulator to invest up to
100% of its RQFII funds' NAV in debt instruments traded on the
China interbank bond market.
An element of the third phase of the Group's strategy is to
develop a network of domestic asset management businesses within
certain Emerging Markets. The existing platforms continue to
develop, for example Indonesia now manages approximately US$700
million, and during the period the Group opened an office in Saudi
Arabia. A range of onshore mutual funds has now been launched in
Saudi Arabia, to be followed by offshore funds that will provide
investors with comprehensive access to the large and liquid Saudi
Arabian capital markets, further evidence of Ashmore's ability to
provide access to Emerging Markets for global investors. Initial
client interest in the Saudi Arabia platform is encouraging.
These developments confirm Ashmore's position at the forefront
of accessing Emerging Markets on behalf of its clients. In total,
32% of AuM originates from investors domiciled in Emerging Markets
and the Group expects this proportion to increase over time.
Ashmore, in partnership with Source, made two SICAVs available
to investors in an exchange-traded fund (ETF) format on the London
Stock Exchange in October, through offering new share classes for
its blended debt and corporate debt funds. The ETF share class
provides intra-day liquidity and ease of access to the actively
managed funds, and continues the expansion of the Group's
distribution capabilities.
The Group's mutual fund platforms continue to develop. The
40-Act funds experienced net inflows and manage US$1.3 billion
across a range of nine funds. The SICAV product range has increased
to 35 funds (30 June 2014: 32 funds) and manages US$8.3
billion.
Financial review
The Group adopted IFRS 10 with effect from 1 July 2014, which
redefines the concept of control for consolidation purposes and
resulted in four additional funds being consolidated
retrospectively from the date of acquiring a controlling stake.
Further information and restated historical financial statements
are presented in Notes 2 and 20. There is no impact on the Group's
net assets or total comprehensive income as a result of the
adoption of IFRS 10.
Revenues
Net revenues increased 22% from GBP134.6 million to GBP164.0
million as a result of higher performance fees and foreign exchange
gains, partly offset by lower net management fee income.
The Group's management fee income, net of distribution costs,
was GBP133.0 million, a decline of 11% over the prior year period
(H1 2013/14: GBP149.8 million). The lower level of fee income is
attributable to the 8% reduction in average AuM, a 3% adverse
movement in the average GBP:USD rate and a slight decline in the
net management fee margin to 60bps (H1 2013/14: 61bps).
Net management fee income includes the release of an accrual
following the renegotiation of a distribution agreement, which
contributed approximately one basis point to the Group net
management fee margin and should be considered non-recurring in
nature.
Performance fees of GBP7.0 million (H1 2013/14: GBP0.7 million)
were delivered in the period, predominantly by funds with an August
year end. At 31 December 2014, 13% of the Group's AuM were eligible
to earn performance fees (30 June 2014: 12%).
Translation of the Group's non-Sterling assets and liabilities
at the period end resulted in a foreign exchange gain of GBP20.1
million (H1 2013/14: GBP20.5 million loss), reflecting principally
US dollar strength against Sterling. The Group recognised net
realised and unrealised hedging gains of GBP1.3 million (H1
2013/14: GBP2.0 million).
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 net management fee
margin by investment theme.
Net management fee
Net management fees Performance fees margin
====================== ====================== ======================
H1 2013/14 H1 2014/15 H1 2013/14 H1 2014/15 H1 2013/14 H1 2014/15
Investment theme GBPm GBPm GBPm GBPm bps bps
================== ========== ========== ========== ========== ========== ==========
External debt 26.9 23.6 0.4 6.8 61 57
Local currency 27.3 24.5 0.1 - 50 46
Corporate debt 15.2 15.9 - - 74 64
Blended debt 34.3 35.0 0.1 0.1 56 56
Equities 13.1 16.6 - 0.1 75 98
Alternatives 15.0 7.9 0.1 - 229 166
Multi-strategy 12.9 7.8 - - 124 107
Overlay/liquidity 5.1 1.7 - - 18 19
================== ========== ========== ========== ========== ========== ==========
Total 149.8 133.0 0.7 7.0 61 60
================== ========== ========== ========== ========== ========== ==========
Operating costs
The Group continues to manage its cost base effectively, with a
4% reduction in operating costs excluding variable compensation,
from GBP28.8 million to GBP27.6 million. Fixed staff costs of
GBP12.4 million declined by 1% compared with the prior year (H1
2013/14: GBP12.5 million), notwithstanding the 2% rise in average
headcount between the two periods from 292 to 298 employees.
Headcount increased during the six months to 31 December 2014 to
296 employees (30 June 2014: 291 employees), primarily as a result
of the opening of an office in Saudi Arabia.
Other operating costs, excluding depreciation and amortisation,
reduced 7% to GBP12.9 million (H1 2013/14: GBP13.8 million)
predominantly through a focus on controlling discretionary
expenditure in areas such as travel and professional fees.
Variable compensation at the half year has been accrued at 20%
of earnings before variable compensation, interest and tax,
resulting in a charge of GBP27.5 million (H1 2013/14: GBP21.3
million).
The combined depreciation and amortisation charge for the period
was GBP2.3 million (H1 2013/14: GBP2.5 million).
EBITDA
EBITDA of GBP107.7 million is higher than in the prior year (H1
2013/14: GBP93.8 million) as a result of the mark-to-market foreign
exchange translation effect, higher performance fees and lower
non-staff operating costs, partly offset by lower net management
fees. Adjusted EBITDA, which reclassifies items relating to
acquisitions, seed capital investments and foreign exchange
translation effects, was 7% lower at GBP96.3 million for the period
(H1 2013/14: GBP104.1 million). The adjusted EBITDA margin, which
reflects operating performance, was maintained at the prior year
level of 67%.
Finance income
Net finance income of GBP6.5 million (H1 2013/14: GBP9.8 million
expense) includes items relating to seed capital investments and
acquisitions. Net interest income for the period was GBP0.8 million
(H1 2013/14: GBP0.3 million).
Seed capital generated an investment return of GBP1.7 million
during the six months (H1 2013/14: GBP3.0 million), including a
realised gain of GBP2.8 million on the seed capital employed in the
Group's Chinese real estate joint venture. The translation of
non-Sterling denominated seed capital investments resulted in a
foreign exchange gain of GBP1.7 million (H1 2013/14: GBP13.7
million loss).
There were no acquisition-related items in the current period
(H1 2013/14: GBP0.4 million).
Taxation
The majority of the Group's profit is subject to UK taxation. Of
the total current tax charge for the period of GBP24.0 million (H1
2013/14: GBP14.0 million), GBP21.3 million relates to UK
corporation tax (H1 2013/14: GBP12.6 million). The Group's
effective tax rate for the period is 24.8% (H1 2013/14: 19.1%),
which is higher than the blended UK corporation tax rate of 20.75%,
primarily due to a reduction in the deferred tax asset relating to
unvested shares. Further detail is contained in note 9 to the
interim condensed consolidated financial statements.
Balance sheet, cash flow and foreign exchange management
It is the Group's policy to maintain a strong balance sheet in
order to support regulatory capital requirements, to meet the
commercial demands of current and prospective investors, and to
fulfil development needs across the business. These include funding
establishment costs of distribution offices and local asset
management ventures, seeding new funds, trading or investment in
funds or other assets, and other strategic initiatives.
As at 31 December 2014, total equity attributable to
shareholders of the parent was GBP620.8 million (31 December 2013:
GBP598.8 million, 30 June 2014: GBP615.8 million). There is no debt
on the Group's balance sheet.
Cash
Ashmore's business model delivers a high conversion rate of
profits to cash. Based on operating profit of GBP105.4 million for
the period (H1 2013/14: GBP91.3 million), the Group generated cash
of GBP115.2 million before working capital changes (H1 2013/14:
GBP139.0 million) and GBP92.2 million of cash from operations (H1
2013/14: GBP116.5 million).
The following significant items were paid in the period: GBP85.3
million in dividends (H1 2013/14: GBP84.2 million); GBP22.6 million
in taxation (H1 2013/14: GBP29.0 million); and GBP11.9 million to
purchase own shares to satisfy share awards to employees (H1
2013/14: GBP1.9 million). Seeding activity, including cash flows
associated with consolidated funds, increased cash and cash
equivalents by GBP15.6 million (H1 2013/14: GBP27.0 million
reduction) and exchange rate translation effects increased cash and
cash equivalents by GBP23.0 million (H1 2013/14: GBP23.6 million
reduction). Consequently, the Group's cash and cash equivalents
balance increased by GBP13.8 million during the six months to
GBP386.0 million, and is held in the currencies shown in the table
below.
Cash and cash equivalents by currency
31 December 30 June
2014 2014
GBPm GBPm
========== =========== =======
Sterling 148.6 100.3
US dollar 204.2 250.7
Other 33.2 19.6
========== =========== =======
Total 386.0 370.6
========== =========== =======
The US dollar strengthened by 10% against Sterling during the
period and the Group consequently reduced its holdings of US
dollars through spot sales. This has reduced the Group's US dollar
cash exposure to 53% of cash and cash equivalents at 31 December
2014 from 68% at 30 June 2014.
Seed capital investments
As at 31 December 2014 the amount invested in seed capital was
GBP168.2 million (at cost) with a market value of GBP170.4 million
(30 June 2014: GBP185.4 million at cost; GBP187.8 million market
value). The 'at cost' investment represents 31% of Group net
tangible equity (30 June 2014: 34%).
The majority of the Group's seed capital is held in liquid
funds, such as daily-dealing SICAVs or US 40-Act mutual funds. Only
12% of the market value, or approximately GBP21 million, is held in
funds with less than monthly liquidity.
Seed capital by currency
31 December 30 June
2014 2014
GBPm GBPm
=================== =========== =======
US dollar 103.0 122.8
Indonesian rupiah 41.8 36.2
Brazilian real 16.1 17.5
Other 9.5 11.3
=================== =========== =======
Total market value 170.4 187.8
=================== =========== =======
Seed capital is managed actively and during the period the Group
made new commitments of GBP11.5 million and realised GBP22.7
million from previous investments.
Further details of the movements of seed capital items during
the six months can be found in note 14 to the interim condensed
consolidated financial statements. In aggregate, taking into
account consolidated funds, held-for-sale assets,
available-for-sale assets, assets classified as fair value through
profit or loss investments, and non-current asset investments, the
income statement includes a net gain of GBP1.0 million (H1 2013/14:
GBP4.4 million loss) relating to seed capital investments.
Net finance income includes seed capital gains of GBP3.4 million
(H1 2013/14: GBP0.7 million loss), comprising an investment return
of GBP1.7 million (H1 2013/14: GBP3.0 million) and foreign exchange
translation gains of GBP1.7 million (H1 2013/14: GBP13.7 million
loss). The disposal of the Group's interest in a Chinese real
estate joint venture, referred to in the Market review, realised an
investment gain of GBP2.8 million on the Group's invested seed
capital.
Other income statement items in respect of seed capital relate
to consolidated funds and amount to a loss of GBP2.4 million (H1
2013/14: GBP6.3 million gain). The items comprise operating
expenses of GBP1.2 million (H1 2013/14: GBP0.7 million); losses on
investment securities of GBP5.2 million (H1 2013/14: GBP7.5 million
gain); a gain in respect of third-party interests in consolidated
funds of GBP1.7 million (H1 2013/14: GBP0.7 million loss); and
finance income of GBP2.3 million (H1 2013/14: GBP0.2 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 up to two years' budgeted foreign
currency-denominated net management fees, using either forward or
option foreign exchange contracts.
During the period the Group recognised a foreign exchange gain
in revenues of GBP20.1 million (H1 2013/14: GBP20.5 million loss),
which resulted primarily from the effect of US dollar strength
against Sterling, and net realised and unrealised hedging gains of
GBP1.3 million (H1 2013/14: GBP2.0 million).
The average GBP:USD rate achieved in the period was 1.6289 (H1
2013/14: 1.5868) and the closing rate on 31 December 2014 was
1.5577 (30 June 2014: 1.7106). Based on the period end balance
sheet, for every five cents move in the GBP:USD rate there would be
approximately a GBP7.5 million effect on the Group's profit before
tax. This comprises a seed capital contribution through finance
income of GBP1.0 million and the effect of translating other
non-Sterling balance sheet items of GBP6.5 million recognised in
revenues.
Board changes
Melda Donnelly retired from the Board at the Group's AGM on 30
October 2014 after five years of valuable service and contribution.
David Bennett was appointed to the Board as a Non-executive
Director on 30 October 2014.
Dividend
The Board has determined that an interim dividend of 4.55 pence
per share (H1 2013/14: 4.45 pence per share) will be paid on 10
April 2015 to all shareholders on the register on 6 March 2015.
Mark Coombs
Chief Executive Officer
23 February 2015
Interim condensed consolidated statement of comprehensive
income
For the six months ended 31 December 2014
Restated Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
Notes GBPm GBPm GBPm
==================================================== ===== ============ ============ ==========
Management fees 134.8 152.0 283.1
Performance fees 7.0 0.7 3.1
Other revenue 2.6 2.6 7.9
==================================================== ===== ============ ============ ==========
Total revenue 5 144.4 155.3 294.1
Distribution costs (1.8) (2.2) (4.6)
Foreign exchange 6 21.4 (18.5) (26.6)
==================================================== ===== ============ ============ ==========
Net revenue 164.0 134.6 262.9
Gains/(losses) on investment securities 14 (5.2) 7.5 14.9
Change in third-party interests in consolidated
funds 14 1.7 (0.7) (6.1)
Personnel expenses (39.9) (33.8) (66.1)
Other expenses (15.2) (16.3) (34.3)
==================================================== ===== ============ ============ ==========
Operating profit 105.4 91.3 171.3
Finance income 7 6.8 5.7 10.7
Finance expense 7 (0.3) (15.5) (8.5)
Share of losses from associates and joint
ventures (1.2) (0.7) (1.9)
==================================================== ===== ============ ============ ==========
Profit before tax 110.7 80.8 171.6
Tax expense 9 (27.4) (15.4) (36.9)
==================================================== ===== ============ ============ ==========
Profit for the period 83.3 65.4 134.7
Other comprehensive income, net of related
tax effect
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation differences
arising on foreign operations 13.1 (16.0) (20.2)
Fair value reserve (available-for-sale financial
assets):
Net change in fair value 2.9 (3.0) (3.3)
Net amount transferred to profit or loss (2.4) (2.1) (2.5)
Cash flow hedge intrinsic value gains/(losses) (4.2) 2.3 2.8
==================================================== ===== ============ ============ ==========
Other comprehensive income, net of tax 9.4 (18.8) (23.2)
==================================================== ===== ============ ============ ==========
Total comprehensive income for the period 92.7 46.6 111.5
==================================================== ===== ============ ============ ==========
Profit attributable to:
Equity holders of the parent 81.0 64.1 132.1
Non-controlling interests 2.3 1.3 2.6
==================================================== ===== ============ ============ ==========
Profit for the period 83.3 65.4 134.7
==================================================== ===== ============ ============ ==========
Total comprehensive income attributable
to:
Equity holders of the parent 89.6 46.1 109.5
Non-controlling interests 3.1 0.5 2.0
==================================================== ===== ============ ============ ==========
Total comprehensive income for the period 92.7 46.6 111.5
==================================================== ===== ============ ============ ==========
Earnings per share
Basic 10 12.02p 9.42p 19.48p
Diluted 10 11.50p 9.01p 18.63p
==================================================== ===== ============ ============ ==========
Comparative information has been restated to reflect the
adoption of IFRS 10 Consolidated Financial Statements, see notes 2
and 20. The notes on pages 13 to 27 form an integral part of these
financial statements.
Interim condensed consolidated balance sheet
As at 31 December 2014
Restated Restated
Unaudited Unaudited Audited
31 December 31 December 30 June
2014 2013 2014
Notes GBPm GBPm GBPm
============================================== ===== ============ ============ ========
Assets
Non-current assets
Goodwill and intangible assets 12 76.8 76.2 72.2
Property, plant and equipment 3.0 3.4 3.0
Investment in associates and joint
ventures 7.9 11.1 9.7
Non-current asset investments 14 9.6 11.2 11.7
Other receivables 0.2 0.1 0.2
Deferred tax assets 16.6 20.1 21.3
============================================== ===== ============ ============ ========
114.1 122.1 118.1
============================================== ===== ============ ============ ========
Current assets
Investment securities 14 194.9 127.9 173.2
Available-for-sale financial assets 14 15.8 19.5 29.4
Fair value through profit or loss investments 14 16.8 11.7 8.4
Trade and other receivables 82.2 79.8 69.7
Derivative financial instruments 0.1 1.9 2.5
Cash and cash equivalents 386.0 346.9 372.2
============================================== ===== ============ ============ ========
695.8 587.7 655.4
============================================== ===== ============ ============ ========
Non-current assets held-for-sale 14 57.6 81.0 39.1
============================================== ===== ============ ============ ========
Total assets 867.5 790.8 812.6
============================================== ===== ============ ============ ========
Equity and liabilities
Capital and reserves - attributable
to equity holders of the parent
Issued capital 16 - - -
Share premium 15.7 15.7 15.7
Retained earnings 614.6 596.6 618.2
Foreign exchange reserve (2.3) (10.2) (14.6)
Available-for-sale fair value reserve (4.8) (4.6) (5.3)
Cash flow hedging reserve (2.4) 1.3 1.8
============================================== ===== ============ ============ ========
620.8 598.8 615.8
Non-controlling interests 18.2 15.6 16.4
============================================== ===== ============ ============ ========
Total equity 639.0 614.4 632.2
============================================== ===== ============ ============ ========
Liabilities
Non-current liabilities
Deferred tax liabilities 3.2 3.3 4.5
============================================== ===== ============ ============ ========
3.2 3.3 4.5
============================================== ===== ============ ============ ========
Current liabilities
Current tax 17.6 14.1 16.4
Third-party interests in consolidated
funds 14 106.7 51.4 69.7
Derivative financial instruments 4.0 - 0.1
Trade and other payables 70.2 88.9 87.0
============================================== ===== ============ ============ ========
198.5 154.4 173.2
============================================== ===== ============ ============ ========
Non-current liabilities held-for-sale 14 26.8 18.7 2.7
============================================== ===== ============ ============ ========
Total liabilities 228.5 176.4 180.4
============================================== ===== ============ ============ ========
Total equity and liabilities 867.5 790.8 812.6
============================================== ===== ============ ============ ========
Comparative information has been restated to reflect the
adoption of IFRS 10 Consolidated Financial Statements, see notes 2
and 20. The notes on pages 13 to 27 form an integral part of these
financial statements.
Interim condensed consolidated statement of changes in
equity
For the six months ended 31 December 2014
Attributable to equity holders of
the parent
=============================================================================
Cash
Foreign flow
Issued Share Retained exchange Available-for-sale hedging Non-controlling Total
capital premium earnings reserve reserve reserve Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Audited balance at 30
June 2013 (Restated) - 15.7 608.5 5.0 0.5 (1.0) 628.7 17.1 645.8
Profit for the period - - 64.1 - - - 64.1 1.3 65.4
Other comprehensive
income/(loss):
Foreign currency
translation
differences
arising on
foreign operations - - - (15.2) - - (15.2) (0.8) (16.0)
Net fair value loss
on
available-for-sale
assets
including tax - - - - (3.0) - (3.0) - (3.0)
Net gains
reclassified
from
available-for-sale
reserve to
comprehensive
income - - - - (2.1) - (2.1) - (2.1)
Cash flow hedge
intrinsic
value gains - - - - - 2.3 2.3 - 2.3
---------------------- ------- ------- -------- -------- ------------------ ------- ---------- --------------- ------
Total comprehensive
income/(loss) - - 64.1 (15.2) (5.1) 2.3 46.1 0.5 46.6
Transactions with
owners:
Purchase of own
shares - - (1.9) - - - (1.9) (1.0) (2.9)
Share-based
payments - - 7.8 - - - 7.8 1.9 9.7
Dividends to equity
holders - - (81.9) - - - (81.9) - (81.9)
Dividends to
non-controlling
interests - - - - - - - (2.9) (2.9)
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Total contributions
and
distributions - - (76.0) - - - (76.0) (2.0) (78.0)
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Unaudited balance at
31
December 2013
(Restated) - 15.7 596.6 (10.2) (4.6) 1.3 598.8 15.6 614.4
Profit for the period - - 68.0 - - - 68.0 1.3 69.3
Other comprehensive
income/(loss):
Foreign currency
translation
differences
arising on
foreign operations - - - (4.4) - - (4.4) 0.2 (4.2)
Net fair value loss
on
available-for-sale
assets
including tax - - - - (0.3) - (0.3) - (0.3)
Net gains
reclassified
from
available-for-sale
reserve to
comprehensive
income - - - - (0.4) - (0.4) - (0.4)
Cash flow hedge
intrinsic
value gains - - - - - 0.5 0.5 - 0.5
---------------------- ------- ------- -------- -------- ------------------ ------- ---------- --------------- ------
Total comprehensive
income/(loss) - - 68.0 (4.4) (0.7) 0.5 63.4 1.5 64.9
Transactions with
owners:
Purchase of own
shares - - (27.9) - - - (27.9) 1.0 (26.9)
Share-based
payments - - 12.1 - - - 12.1 2.0 14.1
Dividends to equity
holders - - (30.6) - - - (30.6) - (30.6)
Dividends to
non-controlling
interests - - - - - - - (3.7) (3.7)
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Total contributions
and
distributions - - (46.4) - - - (46.4) (0.7) (47.1)
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Audited balance at 30
June 2014 (Restated) - 15.7 618.2 (14.6) (5.3) 1.8 615.8 16.4 632.2
Profit for the period - - 81.0 - - - 81.0 2.3 83.3
Other comprehensive
income/(loss):
Foreign currency
translation
differences
arising on
foreign operations - - - 12.3 - - 12.3 0.8 13.1
Net fair value
gains on
available-for-sale
assets
including tax - - - - 2.9 - 2.9 - 2.9
Net gains
reclassified
from
available-for-sale
reserve to
comprehensive
income - - - - (2.4) - (2.4) - (2.4)
Cash flow hedge
intrinsic
value gains - - - - - (4.2) (4.2) - (4.2)
---------------------- ------- ------- -------- -------- ------------------ ------- ---------- --------------- ------
Total comprehensive
income/(loss) - - 81.0 12.3 0.5 (4.2) 89.6 3.1 92.7
Transactions with
owners:
Purchase of own
shares - - (11.0) - - - (11.0) (0.9) (11.9)
Share-based
payments - - 9.0 - - - 9.0 2.2 11.2
Proceeds received
on exercise
of vested options - - 0.1 - - - 0.1 - 0.1
Dividends to equity
holders - - (82.7) - - - (82.7) - (82.7)
Dividends to
non-controlling
interests - - - - - - - (2.6) (2.6)
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Total contributions
and
distributions - - (84.6) - - - (84.6) (1.3) (85.9)
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Unaudited balance at
31
December 2014 - 15.7 614.6 (2.3) (4.8) (2.4) 620.8 18.2 639.0
====================== ======= ======= ======== ======== ================== ======= ========== =============== ======
Comparative information has been restated to reflect the
adoption of IFRS 10 Consolidated Financial Statements, see notes 2
and 20. The notes on pages 13 to 27 form an integral part of these
financial statements.
Interim condensed consolidated cash flow statement
For the six months ended 31 December 2014
Restated Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
=============================================================== ============ ============ ==========
Operating activities
Operating profit 105.4 91.3 171.3
Adjustments for non-cash items:
Depreciation and amortisation 2.3 2.5 4.9
Accrual for variable compensation 27.5 21.3 41.5
Unrealised foreign exchange (gains)/losses (21.4) 18.5 26.6
Other non-cash items 1.4 5.4 3.6
=============================================================== ============ ============ ==========
Cash generated from operations before working capital
changes 115.2 139.0 247.9
Changes in working capital:
Decrease (Increase) in trade and other receivables (12.5) 2.7 12.8
Decrease (Increase) in derivative financial instruments 6.3 (4.1) (4.6)
Increase/(Decrease) in trade and other payables (16.8) (21.1) (23.0)
=============================================================== ============ ============ ==========
Cash generated from operations 92.2 116.5 233.1
Taxes paid (22.6) (29.0) (48.3)
=============================================================== ============ ============ ==========
Net cash from operating activities 69.6 87.5 184.8
=============================================================== ============ ============ ==========
Investing activities
Interest received 2.0 0.3 0.5
Dividends received 0.7 0.5 0.3
Proceeds on disposal of associates 0.6 - -
Purchase of non-current asset investments (0.1) (0.7) (2.0)
Purchase of financial assets held-for-sale (9.4) (15.6) (30.4)
Purchase of available-for-sale financial assets - (21.3) (21.3)
Purchase of fair value through profit or loss investments (2.0) - -
Purchase of investment securities (43.6) (68.4) (58.3)
Sale of non-current asset investments 0.1 - 2.3
Sale of financial assets held-for-sale - 3.3 12.7
Sale of available-for-sale financial assets 3.7 33.5 24.9
Sale of fair value through profit or loss investments 4.9 - -
Sale of investment securities 14.0 33.8 17.7
Net cash flow arising on initial consolidation/deconsolidation
of seed
capital investments 0.5 1.1 9.9
Purchase of property, plant and equipment (0.5) (0.4) (0.4)
=============================================================== ============ ============ ==========
Net cash used in investing activities (29.1) (33.9) (44.1)
=============================================================== ============ ============ ==========
Interim condensed consolidated cash flow statement
For the six months ended 31 December 2014
Restated Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
===================================================== ============ ============ ==========
Financing activities
Dividends paid to equity holders (82.7) (82.0) (112.5)
Dividends paid to non-controlling interests (2.6) (2.2) (6.6)
Subscriptions into consolidated funds 91.3 22.6 63.7
Redemptions from consolidated funds (43.8) (15.3) (46.2)
Distributions paid by consolidated funds - - (0.5)
Purchase of own shares (11.9) (1.9) (29.8)
===================================================== ============ ============ ==========
Net cash used in financing activities (49.7) (78.8) (131.9)
===================================================== ============ ============ ==========
Net (decrease)/increase in cash and cash equivalents (9.2) (25.2) 8.8
Cash and cash equivalents at beginning of period 372.2 395.7 397.1
Effect of exchange rate changes on cash and cash
equivalents 23.0 (23.6) (33.7)
===================================================== ============ ============ ==========
Cash and cash equivalents at end of period 386.0 346.9 372.2
===================================================== ============ ============ ==========
Cash and cash equivalents comprise:
Cash at bank and in hand 90.4 111.9 76.4
Daily dealing liquidity funds 172.9 195.0 224.6
Deposits 122.7 40.0 71.2
===================================================== ============ ============ ==========
386.0 346.9 372.2
===================================================== ============ ============ ==========
The indirect method of presenting cash generated from operations
has been adopted with effect from 1 July 2014. Previously, the
direct method was presented, see note 3 for further details.
Comparative information has been restated to reflect the
adoption of IFRS 10 Consolidated Financial Statements, see notes 2
and 20. The notes on pages 13 to 27 form an integral part of these
financial statements.
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 2014 were authorised for issue by the
Directors on 23 February 2015.
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 Disclosure and Transparency Rules
of the Financial Conduct Authority (FCA) and with International
Accounting Standard 34 Interim Financial Reporting as adopted by
the European Union.
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 2014 which are available on the Group's
website. Those statutory accounts were approved by the Board of
Directors on 10 September 2014 and have been filed with the
Registrar of Companies. The report of the auditors on those
accounts was unqualified.
New standards, interpretations and amendments adopted by the
Group
The accounting policies applied in these interim results are
consistent with those applied in the Group's annual statutory
financial statements for 2014, except for the following Standards
and Interpretations adopted from 1 July 2014:
- IFRS 10 Consolidated Financial Statements
- IFRS 11 Joint Arrangements
- IFRS 12 Disclosure of Interests in Other Entities
IFRS 10 redefines the concept of control for consolidation
purposes and its adoption has led to four additional funds being
consolidated where the Group is now deemed to hold a controlling
interest, as defined by this accounting Standard. This has resulted
in the total assets and liabilities of those funds being
consolidated on a line-by-line basis within the Group's condensed
consolidated balance sheet, and the third-party interest in the
consolidated funds being recorded within liabilities. There is no
impact on the net assets or total comprehensive income of the
Group. The Group's previously reported condensed consolidated cash
flows have also been restated to include cash flows from those
funds. Further details on the effect of the restatement on the
Group's condensed consolidated financial statements are set out in
note 20.
Prior to the application of IFRS 10, the Group consolidated
where its shareholding resulted in control, as defined by IFRS.
This policy has not changed subsequent to the adoption of IFRS 10.
However, the change to the definition of control under IFRS 10
means that certain of the Group's funds, principally where the
Group holds seed capital investments, now meet the definition of a
subsidiary as they are deemed to be controlled by the Group.
Control is deemed to exist when the Group has power over a fund and
is exposed to variable returns through management or performance
fees, fair value gains or losses, or distributions from interests
in funds managed. The Group will consolidate a fund where it is
seen to be acting as a principal (i.e. power is used for
self-benefit) and not as an agent (i.e. power is used for the
benefit of others, in which case the Group will not consolidate the
fund). The Group is considered to act as a principal where it is
assessed that third-party investors do not have substantive rights
to remove the Group as the fund manager without cause, and the
level of the Group's aggregate economic interest in the fund
(comprising any carried interests and expected management fees)
indicates that power is being used for self-benefit.
IFRS 11 outlines the classification and accounting for jointly
controlled arrangements that involve contractually agreed sharing
of control. An arrangement subject to joint control under IFRS 11
is classified as either a joint venture (representing a share of
net assets, accounted for using the equity method) or a joint
operation (representing rights to assets and obligations for
liabilities, accounted for accordingly). The adoption of this
Standard has not resulted in any impact on the Group's financial
statements.
IFRS 12 requires certain additional disclosures to be made in
respect of the Group's interests in the funds it manages. These
disclosures are not required to be presented as part of the Group's
interim results, but will be presented within the 2015 annual
report and accounts.
New Standards and Interpretations not yet adopted
The Group did not implement the requirements of the following
Standards or Interpretations which were in issue but were not
required to be implemented as at 31 December 2014:
- IFRS 9 Financial Instruments
- IFRS 15 Revenue from Contracts with Customers
No other Standards or Interpretations issued and not yet
effective are expected to have an impact on the Group's condensed
consolidated financial statements.
Going concern
After making enquiries, the Directors believe that the Group has
considerable financial resources and is well placed to manage its
business risks in the context of the current economic outlook.
Accordingly, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. They therefore continue to adopt the
going concern basis in preparing these interim condensed
consolidated financial statements.
3) Accounting policies
The accounting policies adopted in the preparation of these
interim condensed consolidated financial statements are consistent
with those applied in the preparation of the Group's annual report
and accounts for the year ended 30 June 2014, except for the
adoption of the indirect method of presenting cash generated from
operations in the Group condensed consolidated cash flow statement
with effect from 1 July 2014.
In accordance with IAS 7 Statement of Cash Flows, the Group
elected to adopt and present cash generated from operations using
the indirect method (i.e. reconciliation of operating profit to net
cash from operating activities). Previously, the Group presented
cash generated from operations using the direct method (i.e. cash
receipts from customers less cash paid to suppliers and
employees).
The Group believes that the indirect method provides additional
disclosure on the items that affect cash flows generated from
operating activities. Comparative consolidated cash flow statement
information has been restated to reflect the new presentation,
however, this did not result in any impact on the current or prior
period cash flows generated from operations.
4) Segmental information
Key management information, including revenues, margins,
investment performance, distribution costs and AuM flows, which is
relevant to the operation of the Group, continues to be reported to
and reviewed by the Board on the basis of the investment management
business as a whole and, hence, the Group's management considers
that the Group's services and its operations are not run on a
discrete geographic basis and comprise one business segment (being
provision of investment management services).
The location of the Group's non-current assets at the end of the
period other than financial instruments, deferred tax assets and
post-employment benefit assets are shown in the table below.
Disclosures relating to revenue are in note 5.
Analysis of non-current assets by geography
As at As at As at
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
=============== ============ ============ ========
United Kingdom 12.5 15.9 14.3
United States 74.6 74.1 70.1
Other 0.6 0.7 0.5
=============== ============ ============ ========
5) Revenue
Management fees are accrued throughout the period in line with
prevailing levels of assets under management and performance fees
are recognised when they can be estimated reliably and it is
probable that they will crystallise. 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
2013/14: one; FY2013/14: none) when considering management fees and
performance fees on a combined basis.
Analysis of revenue by geography
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
============================== ============ ============ =========
United Kingdom earned revenue 130.8 139.9 266.2
United States earned revenue 10.9 12.6 22.2
Other 2.7 2.8 5.7
============================== ============ ============ =========
6) Foreign exchange
The foreign exchange rates which had a material impact on the
Group's results are the US dollar, the Brazilian real and the
Indonesian rupiah.
Average rate Average rate Average rate
Closing rate Closing rate Closing rate 6 months 6 months 12 months
as at as at as at ended ended ended
31 December 31 December 30 June 31 December 31 December 30 June
2014 2013 2014 2014 2013 2014
================== ============ ============ ============ ============ ============ ============
US dollar 1.5577 1.6557 1.7106 1.6289 1.5868 1.6281
Brazilian real 4.1398 3.9100 3.7854 3.9149 3.6367 3.7250
Indonesian rupiah 19,287 20,112 20,219 19,536 17,770 18,618
================== ============ ============ ============ ============ ============ ============
Foreign exchange differences arose as shown below.
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
======================================================= ============= ============ =========
Net realised and unrealised hedging gains/(losses) 1.3 2.0 3.5
Translation gains/(losses) on non-sterling denominated
monetary assets and liabilities 20.1 (20.5) (30.1)
======================================================= ============= ============ =========
Total foreign exchange (losses)/gains 21.4 (18.5) (26.6)
======================================================= ============= ============ =========
7) Finance income and expense
Restated Restated
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
========================================================= ============= ============ ==========
Finance income
Interest and dividend income 3.1 0.9 4.7
Net gains on disposal of available-for-sale financial
assets 2.4 2.1 2.5
Net realised gains on seed capital investments measured
at fair value - 2.2 3.0
Net unrealised gains on seed capital investments
measured at fair value 1.3 - -
Release of contingent consideration - 0.5 0.5
========================================================= ============= ============ ==========
Total finance income 6.8 (9.7) 10.7
Finance expense
Net realised losses on seed capital investments measured
at fair value (0.3) - -
Net unrealised losses on seed capital investments
measured at fair value - (15.4) (8.5)
Unwinding of discount on contingent consideration - (0.1) -
========================================================= ============= ============ ==========
Total finance expense (0.3) (15.5) (8.5)
========================================================= ============= ============ ==========
Net finance income 6.5 (9.8) 2.2
========================================================= ============= ============ ==========
8) Share-based payments
The total share-based payments-related cost recognised by the
Group in the statement of comprehensive income is shown below:
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
====================================================== ============= ============= =========
Omnibus Plan 6.9 8.4 19.2
Ashmore Equities Investment Management operating
agreement 0.2 0.2 0.3
Phantom Bonus Plan - - 0.1
====================================================== ============= ============= =========
Total related to compensation awards 7.1 8.6 19.6
Related to acquisition of Ashmore Equities Investment
Management (US) L.L.C. 2.0 1.7 3.6
====================================================== ============= ============= =========
Total share-based payments expense 9.1 10.3 23.2
====================================================== ============= ============= =========
The total expense recognised for the period in respect of
equity-settled share-based payment transactions was GBP11.4 million
(H1 2013/14: GBP9.7 million; FY2013/14: GBP23.9 million).
Ashmore First Discretionary Share Option Scheme (Option
Scheme)
Share options outstanding under the Option Scheme were as
follows:
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
Number of Number of Number of
options options options
=============================== ============ ============ ==========
At the beginning of the period 503,750 503,750 503,750
Exercised (328,750) - -
Forfeited - - -
=============================== ============ ============ ==========
At the end of the period 175,000 503,750 503,750
Options exercisable 175,000 503,750 503,750
=============================== ============ ============ ==========
The Executive Omnibus Incentive Plan (Omnibus Plan)
Share awards outstanding under the Omnibus Plan were as
follows:
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
Number of Number of Number of
shares subject shares subject shares subject
to awards to awards to awards
===================================== =============== =============== ===============
Equity-settled awards
At the beginning of the period 29,315,890 28,339,002 28,339,002
Granted 6,241,637 8,968,222 9,152,515
Vested (3,511,268) (5,987,496) (6,618,753)
Forfeited (278,981) (401,828) (1,556,874)
===================================== =============== =============== ===============
Outstanding at the end of the period 31,767,278 30,917,900 29,315,890
===================================== =============== =============== ===============
Cash-settled awards
At the beginning of the period 5,359,834 5,397,708 5,397,708
Granted 15,161 140,845 140,845
Vested - (71,448) (71,743)
Forfeited - (99,681) (106,976)
===================================== =============== =============== ===============
Outstanding at the end of the period 5,374,995 5,367,424 5,359,834
===================================== =============== =============== ===============
Total awards
At the beginning of the period 34,675,724 33,736,710 33,736,710
Granted 6,256,798 9,109,067 9,293,360
Vested (3,511,268) (6,058,944) (6,690,496)
Forfeited (278,981) (501,509) (1,663,850)
===================================== =============== =============== ===============
Outstanding at the end of the period 37,142,273 36,285,324 34,675,724
===================================== =============== =============== ===============
The fair value of awards granted under the Omnibus Plan is
determined by 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 consolidated balance sheet is GBP4.9 million (H1
2013/14: GBP8.4 million; FY2013/14: GBP7.1 million) of which GBPnil
(H1 2013/14: GBPnil; FY2013/14: GBPnil) relates to vested
awards.
9) Taxation
Analysis of tax charge for the period
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
================================================== ============ ============ =========
Current tax
UK corporation tax on profits for the period 21.3 12.6 30.7
Overseas corporation tax charge 2.7 1.4 4.7
Adjustments in respect of prior periods - - 0.3
================================================== ============ ============ =========
24.0 14.0 35.7
Deferred tax
Origination and reversal of temporary differences 3.4 0.1 (0.1)
Adjustments in respect of prior period - 1.3 (0.2)
Effect of changes in corporation tax rates - - 1.5
================================================== ============ ============ =========
Tax expense for the period 27.4 15.4 36.9
================================================== ============ ============ =========
Factors affecting tax charge for the period
Restated Restated
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
=================================================== ============ ============ ==========
Profit before tax 110.7 80.8 171.6
=================================================== ============ ============ ==========
Profit on ordinary activities multiplied by
the blended UK tax rate of 20.75% (H1 2013/14:
22.5%; FY2013/14: 22.5%) 23.0 18.2 38.6
Effects of:
Non-deductible expenses 3.9 4.2 8.4
Deduction in respect of vested shares/exercised
options (Part 12, Corporation Tax Act 2009) (1.6) (3.4) (3.9)
Deferred tax arising from origination and reversal
of temporary differences 3.5 0.1 (0.1)
Different rate of taxes on overseas profits (0.3) (0.5) (0.1)
Non-taxable income (0.9) (2.3) (4.9)
Tax relief on amortisation and impairment of
goodwill and intangibles (0.5) (0.8) (1.5)
Effect of deferred tax balance from changes
in the UK corporation tax rate - 1.3 1.5
Other items 0.3 (1.4) (1.2)
Adjustments in respect of prior periods - - 0.1
=================================================== ============ ============ ==========
Tax expense for the period 27.4 15.4 36.9
=================================================== ============ ============ ==========
Non-deductible expenses mainly comprise the impact of
non-deductible IFRS 2 accounting charges with respect to
share-based compensation of GBP1.7 million (H1 2013/14:
GBP1.7million; FY2013/14: GBP5.2 million) and other disallowable
expenses of GBP1.8 million across various Group entities (H1
2013/14: GBP2 million; FY2013/14: GBP2.3 million). In addition, a
deferred tax charge of GBP3.4 million arose in the period (H1
2013/14: GBP0.1 million charge; FY 2013/14: GBP0.2 million credit),
in relation to the reduction of the deferred tax asset on unvested
share awards to UK employees.
A reduction of the main rate of UK corporation tax from 21% to
20% was enacted in Finance Act 2013 and will become effective from
1 April 2015. The effect of this rate reduction has been reflected
in the Group's effective tax rate for H1 2014/15 and the 20% rate
used in the calculation of the UK deferred tax assets and
liabilities.
10) Earnings per share
Basic earnings per share is calculated by dividing the profit
after tax for the financial period attributable to equity holders
of the parent by the weighted average number of ordinary shares in
issue during the period, excluding own shares.
Diluted earnings per share is based on basic earnings per share
adjusted for all dilutive potential ordinary shares. There is no
difference between the profit for the period 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 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
Number Number Number
of ordinary of ordinary of ordinary
shares shares shares
============================================= ============ ============ ============
Weighted average number of ordinary shares
used in the calculation
of basic earnings per share 674,687,014 679,141,578 677,970,089
Effect of dilutive potential ordinary shares
- share options/awards 30,674,382 31,203,651 31,034,197
============================================= ============ ============ ============
Weighted average number of ordinary shares
used in the calculation of diluted earnings
per share 705,361,396 710,345,229 709,004,286
============================================= ============ ============ ============
11) Dividends
Dividends paid
6 months 6 months 12 months
to to to 30
31 December 31 December June
2014 2013 2014
GBPm GBPm GBPm
================================================== ============ ============ =========
Final dividend for FY2013/14 - 12.00p (FY2012/13:
11.75p) 82.7 82.0 81.9
Interim dividend for FY2013/14 - 4.45p - - 30.6
================================================== ============ ============ =========
82.7 82.0 112.5
================================================== ============ ============ =========
In addition, the Group paid GBP2.6 million (H1 2013/14: GBP2.2
million; FY2013/14: GBP6.6 million) of dividends to non-controlling
interests.
Dividends declared/proposed
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
Company pence pence pence
==================================== ============ ============ =========
Interim dividend declared per share 4.55 4.45 4.45
Final dividend proposed per share - - 12.00
==================================== ============ ============ =========
4.45 16.45
==================================== ============ ============ =========
The Board has approved an interim dividend for the six months to
31 December 2014 of 4.55 pence per share (six months to 31 December
2013: 4.45 pence per share; final dividend for the year to 30 June
2014: 12.00 pence per share) payable on 10 April 2015 to
shareholders on the register on 6 March 2015.
12) Goodwill and intangible assets
Fund management Other intangible
Goodwill relationships assets Total
GBPm GBPm GBPm GBPm
======================================== ======== =============== ================ =======
Cost
======================================== ======== =============== ================ =======
At 31 December 2014, 30 June 2014 and
31 December 2013 57.5 39.5 2.6 99.6
======================================== ======== =============== ================ =======
Accumulated amortisation and impairment
======================================== ======== =============== ================ =======
At 30 June 2013 - (19.7) (2.5) (22.2)
Amortisation charge for the period - (1.8) (0.1) (1.9)
Impairment charge for the period - - - -
======================================== ======== =============== ================ =======
At 31 December 2013 - (21.5) (2.6) (24.1)
Amortisation charge for the period - (1.7) - (1.7)
Impairment charge for the period - - - -
======================================== ======== =============== ================ =======
At 30 June 2014 - (23.2) (2.6) (25.8)
Amortisation charge for the period - (1.7) - (1.7)
Impairment charge for the period - - - -
======================================== ======== =============== ================ =======
At the end of the period - (24.9) (2.6) (27.5)
======================================== ======== =============== ================ =======
Net book value
======================================== ===== ===== ===== =====
At 30 June 2013 61.7 22.3 0.3 84.3
Accumulated amortisation and impairment
movement for the period - (1.8) (0.1) (1.9)
FX revaluation through reserves* (4.4) (1.8) - (6.2)
======================================== ===== ===== ===== =====
At 31 December 2013 57.3 18.7 0.2 76.2
Accumulated amortisation and impairment
movement for the period - (1.7) (0.2) (1.9)
FX revaluation through reserves* (1.6) (0.5) - (2.1)
======================================== ===== ===== ===== =====
At 30 June 2014 55.7 16.5 - 72.2
Accumulated amortisation and impairment
movement for the period - (1.7) - (1.7)
FX revaluation through reserves* 4.8 1.5 - 6.3
======================================== ===== ===== ===== =====
At 31 December 2014 60.5 16.3 - 76.8
======================================== ===== ===== ===== =====
* FX revaluation through reserves is a result of the
retranslation of US dollar-denominated intangibles and
goodwill.
Goodwill
The goodwill balance within the Group relates principally to the
acquisition of Ashmore Equities Investment Management (US) L.L.C.
(AEIM) in May 2011.
The Group has continued to manage its business as a single unit,
with asset allocations, research and other such operational
practices reflecting the commonality of approach across all fund
themes. The Group therefore still considers itself to have one
cash-generating unit to which goodwill is allocated.
Goodwill is tested for impairment annually or whenever there is
an indication that the carrying amount may not be recoverable based
on management's judgements regarding the future prospects of the
business, estimates of future cash flows and discount rates. The
key assumptions used to determine the recoverable amount were
disclosed in the annual financial statements for the year ended 30
June 2014.
During the period to 31 December 2014, no factors indicating
potential impairment of goodwill were noted and, as a result, no
impairment review was deemed necessary.
Based on management's value in use calculation, the recoverable
amount was in excess of the carrying amount and no impairment was
therefore deemed necessary. An increase in the discount rate by 5%
(31 December 2014: 5%; 30 June 2014: 5%) would not result in the
recoverable amount being lower than the carrying amount.
Fund management relationships
Intangible assets comprise fund management relationships related
to profit expected to be earned from clients of AEIM.
During the period to 31 December 2014, there was a review
process to identify factors indicating that the Group's fund
management relationships were impaired. None were identified and,
as a result, no impairment review was undertaken during the period.
There were no impairment charges included within the Group's other
expenses in the consolidated statement of comprehensive income in
the period (H1 2013/14: GBPnil million; FY2013/14: GBPnil
million).
The remaining amortisation period for fund management
relationships is four and a half years (31 December 2013: five and
a half years; 30 June 2014: five years).
13) 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
2014.
The Group has an established control framework with respect to
the measurement of fair values. This framework includes a valuation
team that has overall responsibility for all significant fair value
measurements. The valuation team regularly reviews significant
inputs and valuation adjustments. If third-party information is
used to measure fair value, then the valuation 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
hierarchy that reflects the significance of inputs used in making
the measurements.
- 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.
- Level 3: Valuation techniques use significant unobservable
inputs.
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 re-assessing
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 At 31 December At 30 June 2014
2014 2013 (Restated) (Restated)
========================== ========================== ==========================
Level Level Level Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total 1 2 3 Total
============================ ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Financial assets
Investment securities 139.8 55.1 - 194.9 69.9 58.0 - 127.9 123.0 50.2 - 173.2
Non-current financial
assets held-for-sale - 57.6 - 57.6 - 81.0 - 81.0 - 39.1 - 39.1
Fair value through
profit or loss investments - 16.8 - 16.8 - 11.7 - 11.7 - 8.4 - 8.4
Available-for-sale
financial assets 0.7 15.1 - 15.8 1.0 18.5 - 19.5 0.8 28.6 - 29.4
Non-current asset
investments - 9.6 - 9.6 - 11.2 - 11.2 - 11.7 - 11.7
Derivative financial
instruments - 0.1 - 0.1 - 1.9 - 1.9 - 2.5 - 2.5
============================ ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
140.5 154.3 - 294.8 70.9 182.3 - 253.2 123.8 140.5 - 264.3
============================ ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Financial liabilities
Third-party interests
in consolidated
funds 76.5 30.2 - 106.7 28.1 23.3 - 51.4 49.5 20.2 - 69.7
Derivative financial
instruments - 4.0 - 4.0 - - - - - 0.1 - 0.1
Non-current financial
liabilities held-for-sale - 26.8 - 26.8 - 18.7 - 18.7 - 2.7 - 2.7
76.5 61.0 - 137.5 28.1 42.0 - 70.1 49.5 23.0 - 72.5
============================ ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Comparative information has been restated to reflect the
adoption of IFRS 10 Consolidated Financial Statements, see notes 2
and 20.
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 2014, 30 June 2014 and 31 December 2013.
14) Seed capital investments
Seed capital investments represent interests taken up by the
Group in funds for which the Group is the investment manager to
provide initial scale and facilitate marketing of the funds to
third-party investors. Where appropriate, comparative information
has been restated to reflect the adoption of IFRS 10 Consolidated
Financial Statements, see notes 2 and 20.
a) Non-current assets and non-current 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. During the period, three funds (H1
2013/14: five; FY2013/14: nine) were seeded in this manner and met
the above criteria, and consequently the assets and liabilities of
these funds were initially classified as held-for-sale.
The non-current assets and liabilities held-for-sale at 31
December 2014 were as follows:
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
===================================================== =========== =========== =======
Non-current financial assets held-for-sale 57.6 81.0 39.1
Non-current financial liabilities held-for-sale (26.8) (18.7) (2.7)
===================================================== =========== =========== =======
Seed capital investments classified as held-for-sale 30.8 62.3 36.4
===================================================== =========== =========== =======
Investments held for less than a year cease to be classified as
held-for-sale when they are no longer controlled by the Group. A
loss of control may happen either 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 fair value
through profit or loss investments. During the period, no funds (H1
2013/14: one; FY2013/14: two) were transferred to fair value
through profit or loss investments after the Group reduced its
interests following investment inflows from third parties.
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 considering the level of stake held and the extent to which
consolidation of the fund on a line-by-line basis would be material
to the presentation of the Group's financial statements. During the
period, five such funds (H1 2013/14: one; FY2013/14: four) with an
aggregate carrying amount of GBP16.2 million (H1 2013/14: GBP6.6
million; FY2013/14: GBP40.6 million) were transferred to
consolidated funds. There was no impact on net assets or total
comprehensive income as a result of the transfer.
As the Group considers itself to have one segment (refer to note
4), no additional segmental disclosure of held-for-sale assets or
liabilities is applicable.
Included within finance income/expense are net gains of GBP1.8
million (H1 2013/14: net losses of GBP13.7 million; FY2013/14: net
losses of GBP10.7 million) in relation to held-for-sale investments
(refer to note 7).
b) Available-for-sale financial assets
Available-for-sale financial assets held at fair value at 31
December 2014 comprise equities held as follows:
Restated Restated
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
============================================== =========== ============ ========
Equities listed on stock exchange 0.7 1.0 0.8
Equity funds 13.0 16.4 10.9
Debt funds 2.1 2.1 17.7
============================================== =========== ============ ========
Seed capital classified as available-for-sale 15.8 19.5 29.4
============================================== =========== ============ ========
c) Fair value through profit or loss investments
FVTPL investments at 31 December 2014 comprise equities held in
equity funds.
Restated
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
===================================================== =========== =========== ========
Seed capital classified as fair value through profit
or loss investments 16.8 11.7 8.4
===================================================== =========== =========== ========
d) Consolidated funds
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. These
funds are consolidated line by line.
Restated Restated
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
============================================ =========== ============ ========
Investment securities 194.9 127.9 173.2
Cash and cash equivalents 12.1 2.4 7.9
Other (2.9) (17.4) (9.5)
Third-party interests in consolidated funds (106.7) (51.4) (69.7)
============================================ =========== ============ ========
Consolidated seed capital investments 97.4 61.5 101.9
============================================ =========== ============ ========
Investment securities include listed and unlisted equities and
debt securities. Other includes trade receivables, trade payables
and accruals.
Included within the consolidated statement of comprehensive
income are net losses of GBP2.4 million (H1 FY2013/14: net gains of
GBP6.3 million; FY2013/14: net gains of GBP9.1 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:
Restated Restated
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
====================================================== =========== ============ ========
Finance income 2.3 0.2 3.8
Gains on investment securities (5.2) 7.5 14.9
Change in third-party interests in consolidated funds 1.7 (0.7) (6.1)
Other expenses (1.2) (0.7) (3.5)
====================================================== =========== ============ ========
Net gains/(losses) on consolidated funds (2.4) 6.3 9.1
====================================================== =========== ============ ========
As of 31 December 2014, the Group's consolidated funds were
domiciled in Brazil, Indonesia, Luxembourg and the United
States.
e) Non-current asset investments
Non-current asset investments relate to the Group's holding in
closed-end funds and are designated as at fair value through profit
or loss. 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 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
============================================ =========== =========== =======
Non-current asset investments at fair value 9.6 11.2 11.7
============================================ =========== =========== =======
Included within finance income are net losses of GBP2.1 million
(H1 2013/14: net gains of GBP1.8 million; FY2013/14: net gains of
GBP3.2 million) on the Group's non-current asset investments.
15) Financial risk management
The Group is subject to strategic and business, investment,
operational and treasury risks throughout its business as discussed
in the Business review and note 22 of the Group's annual report for
the year ended 30 June 2014, which provide 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 2014.
16) Share capital
Authorised share capital
Number of Nominal value
shares GBP'000
=========================================================== =========== =============
Ordinary shares of 0.01p each at 31 December 2014, 30 June
2014
and 31 December 2013 900,000,000 90
=========================================================== =========== =============
Issued share capital - allotted and fully paid
As at As at As at
As at 31 December As at 31 December As at 30 June
31 December 2014 31 December 2013 30 June 2014
2014 Nominal 2013 Nominal 2014 Nominal
Number of value Number of value Number of value
shares GBP'000 shares GBP'000 shares GBP'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.
At 31 December 2014, there were 175,000 options (31 December
2013: 503,750 options; 30 June 2014: 503,750 options) in issue with
contingent rights to the allotment of ordinary shares of 0.01p in
the Company. There were also equity-settled share awards issued
under the Omnibus Plan totalling 31,767,278 shares (31 December
2013: 30,917,900 shares; 30 June 2014: 29,315,890 shares) that have
release dates ranging from September 2015 to December 2019.
17) Own shares
The Ashmore 2004 Employee Benefit Trust (EBT) was established to
act as an agent to facilitate the acquisition and holding of shares
in Ashmore Group plc with a view to facilitating the recruitment
and motivation of employees. As at 31 December 2014, the EBT owned
37,796,518 (31 December 2013: 29,727,178; 30 June 2014: 37,962,631)
ordinary shares of 0.01p with a nominal value of GBP3,780 (31
December 2014: GBP2,972; 30 June 2014: GBP3,796) and shareholders'
funds are reduced by GBP124.9 million (31 December 2014: GBP119.3
million; 30 June 2014: GBP124.6 million) in this respect. It is the
intention of the Directors to make these shares available to
employees through the share-based compensation plans. The EBT is
periodically funded by the Company for these purposes.
18) 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 for
employee services is shown below:
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
=================================== ============= ============= =========
Short-term employee benefits 0.1 0.1 0.9
Defined contribution pension costs - - -
Share-based payment benefits - - (0.4)
=================================== ============= ============= =========
0.1 0.1 0.5
=================================== ============= ============= =========
Share-based payment benefits represent the fair value charge to
the statement of comprehensive income of share awards.
During the period, there were no other transactions entered into
with key management personnel (H1 2013/14 and FY2013/14: none).
Aggregate key management personnel interests in consolidated funds
at 31 December 2014 was GBP8.4 million (31 December 2014: GBP9.2
million; 30 June 2014: GBP3.3 million).
Transactions with Ashmore Funds
During the period, the Group received GBP66.1 million of gross
management fees and performance fees (H1 2013/14: GBP118.5 million;
FY2013/14: GBP158.5 million) from the 83 funds (H1 2013/14: 77
funds; FY2013/14: 90 funds) it manages and which are classified as
related parties. As at 31 December 2014, the Group had receivables
due from funds of GBP61.2 million (31 December 2014: GBP23.4
million; 30 June 2014: GBP55.3 million).
Transactions with the EBT
The EBT, which acts as an agent for the purpose of the employee
share-based compensation plans, 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 2014, the loan outstanding
was GBP148.6 million (31 December 2014: GBP114.7 million; 30 June
2014: GBP137.6 million).
Transaction 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 geographies in which Ashmore
operates with a view to giving back into the countries and
communities in which the Group invests and which contribute to
Ashmore's income and profitability. The Group made donations of
GBP25,000 to the Foundation during the period (H1 2013/14:
GBP20,000; FY2013/14: GBP35,000).
19) Commitments
Undrawn investment commitments
As at As at As at
31 December 31 December 30 June
2014 2013 2014
GBPm GBPm GBPm
============================================= ============ ============ ========
VTBC-Ashmore Real Estate Partners I, L.P. 3.4 3.4 3.5
Everbright Ashmore China Real Estate Fund 1.6 1.6 1.6
Ashmore I - FCP Colombia Infrastructure Fund 2.9 3.9 2.9
Ashmore Special Opportunities Fund LP 15.4 - -
============================================= ============ ============ ========
20) Restatements on adoption of IFRS 10
As explained in note 2, the Group has adopted IFRS 10 in the
period and has reassessed its consolidation conclusions as at 1
July 2014. As a result, the Group has concluded that it has control
and, therefore, has consolidated four additional funds
retrospectively from the date of acquiring a controlling stake,
with the impact of increasing consolidated total assets and
liabilities by GBP73.9 million as at 1 July 2014. These funds were
previously accounted for as financial assets and classified as
available-for-sale financial assets or investments held at fair
value through profit and loss. The Group has restated comparative
information where relevant, as shown below. The Group's cash flow
statement has also been restated, with the effect of increasing
reported subscriptions and redemptions in consolidated funds by
GBP17.3 million and GBP14.7 million, respectively, for H1 2013/14
(FY2013/14: subscriptions and redemptions in consolidated funds
increased by GBP44.6 million and GBP40.2 million,
respectively).
Impact on consolidated statement of comprehensive income
Unaudited
Six months to 31 December Audited
2013 12 months to 30 June 2014
======================================== ========================================
As previously IFRS 10 As previously IFRS 10
reported restatement As restated reported restatement As restated
GBPm GBPm GBPm GBPm GBPm GBPm
==================== ============= ============ =========== ============= ============ ===========
Net revenue 134.6 - 134.6 262.9 - 262.9
Operating profit 89.7 1.6 91.3 169.7 1.6 171.3
Profit before tax 79.5 1.3 80.8 170.3 1.3 171.6
Profit for the
period 64.1 1.3 65.4 133.4 1.3 134.7
Other comprehensive
income, net of
related tax effect (17.5) (1.3) (18.8) (21.9) (1.3) (23.2)
Total comprehensive
income for the
period 46.6 - 46.6 111.5 - 111.5
===================== ============= ============ =========== ============= ============ ===========
Profit attributable
to:
Equity holders
of the parent 62.8 1.3 64.1 130.8 1.3 132.1
Non-controlling
interests 1.3 - 1.3 2.6 - 2.6
===================== ============= ============ =========== ============= ============ ===========
Profit for the
period 64.1 1.3 65.4 133.4 1.3 134.7
===================== ============= ============ =========== ============= ============ ===========
Earnings per share
Basic 9.23p 0.19p 9.42p 19.29p 0.19p 19.48p
Diluted 8.83p 0.18p 9.01p 18.44p 0.19p 18.63p
===================== ============= ============ =========== ============= ============ ===========
Impact on consolidated balance sheets
Audited Unaudited Audited
30 June 2014 31 December 2013 30 June 2013
=================== =================================
As IFRS As IFRS As IFRS
Condensed previously 10 As previously 10 As previously 10 As
consolidated reported restatement restated reported restatement restated reported restatement restated
balance sheet GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=================== ========== =========== ======== ========== =========== ========= ========== =========== ========
Non-current assets 118.1 - 118.1 122.1 - 122.1 130.6 - 130.6
Investment
securities 70.7 102.5 173.2 63.9 64.0 127.9 49.7 57.8 107.5
Available-for-sale
financial assets 48.5 (19.1) 29.4 38.1 (18.6) 19.5 55.6 (19.2) 36.4
Fair value through
profit or loss
investments 25.3 (16.9) 8.4 11.7 - 11.7 - - -
Trade and other
receivables 64.0 5.7 69.7 72.3 7.5 79.8 77.3 5.2 82.5
Derivative financial
instruments 2.4 0.1 2.5 1.9 - 1.9 - - -
Cash and cash
equivalents 370.6 1.6 372.2 346.8 0.1 346.9 395.5 0.2 395.7
Non-current assets
held-for-sale 39.1 - 39.1 81.0 - 81.0 104.9 - 104.9
==================== ========== =========== ======== ========== =========== ========= ========== =========== ========
Total assets 738.7 73.9 812.6 737.8 53.0 790.8 813.6 44.0 857.6
==================== ========== =========== ======== ========== =========== ========= ========== =========== ========
Non-current
liabilities 4.5 - 4.5 3.3 - 3.3 3.0 - 3.0
Current tax 16.4 - 16.4 14.1 - 14.1 28.9 - 28.9
Third-party
interests
in consolidated
funds 13.5 56.2 69.7 22.0 29.4 51.4 12.8 28.0 40.8
Derivative financial
instruments - 0.1 0.1 - - - 2.1 0.1 2.2
Trade and other
payables 69.4 17.6 87.0 65.3 23.6 88.9 94.1 15.9 110.0
Non-current
liabilities
held-for-sale 2.7 - 2.7 18.7 - 18.7 26.9 - 26.9
==================== ========== =========== ======== ========== =========== ========= ========== =========== ========
Total liabilities 106.5 73.9 180.4 123.4 53.0 176.4 167.8 44.0 211.8
==================== ========== =========== ======== ========== =========== ========= ========== =========== ========
Share capital 15.7 - 15.7 15.7 - 15.7 15.7 - 15.7
Retained earnings 616.4 1.8 618.2 594.8 1.8 596.6 608.0 0.5 608.5
Foreign exchange
reserve (12.8) (1.8) (14.6) (7.8) (2.4) (10.2) 5.3 (0.3) 5.0
Available-for-sale
fair value reserve (5.3) - (5.3) (5.2) 0.6 (4.6) 0.7 (0.2) 0.5
Cash flow hedging
reserve 1.8 - 1.8 1.3 - 1.3 (1.0) - (1.0)
Non-controlling
interests 16.4 - 16.4 15.6 - 15.6 17.1 - 17.1
==================== ========== =========== ======== ========== =========== ========= ========== =========== ========
Total equity 632.2 - 632.2 614.4 - 614.4 645.8 - 645.8
==================== ========== =========== ======== ========== =========== ========= ========== =========== ========
21) Post-balance sheet events
There are no post-balance sheet events that require adjustment
or disclosure in these condensed consolidated financial
statements.
22) Accounting estimates and judgements
In preparing these interim 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 as at and for the year ended 30 June 2014.
23) 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 International Accounting Standard
34 Interim Financial Reporting as adopted by the European Union;
and
- the interim management 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
23 February 2015
Independent Review Report to Ashmore Group plc
Introduction
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 2014 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. 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.
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 Disclosure and Transparency Rules (the DTR) of
the UK's Financial Conduct Authority (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.
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 annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU.
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.
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. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) 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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2014 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU and the DTR of the UK
FCA.
Jonathan Mills
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
23 February 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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