TIDMASHM
RNS Number : 7190O
Ashmore Group PLC
11 February 2016
Ashmore Group plc
11 February 2016
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDING 31 DECEMBER
2015
Ashmore Group plc (Ashmore, the Group), the specialist Emerging
Markets asset manager, today announces its unaudited interim
results for the six months ending 31 December 2015.
Overview
- Assets under management (AuM) of US$49.4 billion at 31
December 2015 (30 June 2015: US$58.9 billion)
- Better flows and performance in Q2
- High margin, long-term capital raised in alternatives theme
- Opportunities to add risk where prices have fallen unjustifiably, based on fundamentals
- Investment performance reflects the cycle: 55% outperforming
benchmarks over one year, 14% over three years and 64% over five
years
- Net revenues declined 29% to GBP116.4 million
- Net management fees of GBP98.7 million declined 26%, in line
with lower average AuM (-25%)
- Performance fees of GBP8.6 million
- Smaller FX translation gains
- Cost flexibility demonstrated: operating costs reduced by 16% to GBP46.3 million
- Adjusted EBITDA of GBP68.0 million (H1 2014/15: GBP96.3 million)
- Margin maintained at a high level of 63%
- Diluted EPS 6.5p (H1 2014/15: 11.5p)
- Good cash generation (GBP56.9 million from operations) and strong balance sheet
- Interim DPS of 4.55p to be paid on 1 April 2016 (H1 2014/15: 4.55p)
Commenting on the Group's results, Mark Coombs, Chief Executive
Officer, Ashmore Group said:
"Notwithstanding the effects that weaker markets and sentiment
have had on AuM levels, Ashmore's inherently flexible cost base has
delivered good cash generation and enabled the profit margin to be
maintained at a high level in the first half of the financial year.
Markets have remained volatile in early 2016, and while this can
provide great value-based investment opportunities, sentiment is
likely to continue to be affected by the lower oil price and
ongoing concerns about slowing global growth, particularly with
respect to China. However, after a prolonged period of adjustment
in Emerging Markets, the current yields across sovereign and
corporate credit markets suggest these asset classes are well
placed to deliver long-term outperformance, particularly with the
backdrop of robust fundamentals."
Analysts briefing
There will be a presentation for analysts at 10am on 11 February
2016 at the offices of UBS at 1 Finsbury Avenue, London, EC2M 2PP.
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 +44 (0)20 3077 6191
Group Finance Director
Paul Measday +44 (0)20 3077 6278
Investor Relations
FTI Consulting
Andrew Walton +44 (0)20 3727 1514
Paul Marriott +44 (0)20 3727 1341
Chief Executive Officer's report
The Group continued to face difficult market conditions and
ongoing negative sentiment towards Emerging Markets in particular
during the six months ending 31 December 2015, with particularly
weak and volatile markets in August, September and December.
Consequently, assets under management declined from US$58.9 billion
to US$49.4 billion, resulting in a 25% reduction in average AuM
levels compared with the same period in the prior year. The
consequent reduction in management fees in the first half was
mitigated to some extent by the generation of performance fees, the
strength of the US dollar against Sterling, and the inherent
flexibility provided by the Group's operating cost structure.
Over the six months, the Group's investment processes sought to
identify and act upon dislocations between market prices and
fundamentals, which provided opportunities to add risk to
portfolios in order to deliver longer-term outperformance.
Adjusted net revenue of GBP108.4 million declined 25% versus the
same period in the prior year, and comprised net management fees of
GBP98.7 million, performance fees of GBP8.6 million, and other
revenues of GBP1.1 million. The 15% reduction in adjusted operating
costs maintained Ashmore's high adjusted EBITDA margin of 63%.
Profit before tax of GBP62.7 million declined from GBP110.7m in
the prior half-year period. Diluted earnings per share were 6.5
pence (H1 2014/15: 11.5 pence) and reflecting Ashmore's strong and
liquid balance sheet, the Board has declared an interim dividend of
4.55 pence per share.
Summary non-GAAP financial performance
The table below reclassifies items relating to seed capital and
the translation of non-Sterling balance sheet positions to aid
clarity and comprehension of the Group's operating performance, and
to provide a more meaningful comparison with the prior period. For
the purposes of presenting 'Adjusted profits', operating expenses
have been adjusted for the variable compensation on foreign
exchange translation gains and losses.
Reclassification of
======================================
Seed
H1 2015/16 capital-related Foreign exchange H1 2015/16 H1 2014/15
GBPm Statutory items translation Adjusted Adjusted
================== ================== ================== ================== ================== ==================
Net revenue 116.4 - (8.0) 108.4 143.9
Investment
securities and
third-party
interests (12.5) 12.5 - - -
Operating expenses (43.8) 1.8 1.6 (40.4) (47.6)
================== ================== ================== ================== ================== ==================
EBITDA 60.1 14.3 (6.4) 68.0 96.3
EBITDA margin 52% - - 63% 67%
Depreciation and
amortisation (2.5) - - (2.5) (2.3)
================== ================== ================== ================== ================== ==================
Operating profit 57.6 14.3 (6.4) 65.5 94.0
Net finance
income/(expense) 6.1 (6.0) 0.9 1.0 0.8
Associates and
joint ventures (1.0) - - (1.0) (1.2)
Seed
capital-related
items - (8.3) - (8.3) (0.7)
Profit before tax
excluding FX
translation 62.7 - (5.5) 57.2 92.9
================== ================== ================== ================== ================== ==================
Foreign exchange
translation - - 5.5 5.5 17.8
================== ================== ================== ================== ================== ==================
Profit before tax 62.7 - - 62.7 110.7
================== ================== ================== ================== ================== ==================
Market review
Volatility in global markets continued in the first half of the
financial year as concerns over global economic growth and
geopolitical risks intensified. In December, the long-awaited
increase in the Federal Reserve's target rate was accompanied by
confirmation that it expects only a gradual rise in interest rates
over time, and markets reacted positively as a source of
uncertainty was removed.
Global fixed income outperformed equities over the period,
consistent with the prevailing market concerns over slowing GDP
growth. The US dollar continued to strengthen on a trade-weighted
basis and most commodity prices declined. These patterns were
reflected in Emerging Markets, with fixed income significantly
outperforming equity indices, and external debt performing better
than unhedged local currency bonds.
Investment themes
External debt Local currency Corporate debt Blended debt
======================== =========================== ====================== ======================
Invests in debt Invests in local Invests in debt Mandates specifically
instruments currencies and instruments combine external,
issued by sovereigns local currency-denominated issued by public local currency
(governments) instruments and private and corporate
and quasi-sovereigns issued by sovereign, sector companies. debt measured
(government-sponsored). quasi-sovereign against tailor-made
and corporate blended indices.
issuers.
======================== =========================== ====================== ======================
Equities Alternatives Multi-asset Overlay/liquidity
(MORE TO FOLLOW) Dow Jones Newswires
February 11, 2016 02:00 ET (07:00 GMT)
======================== =========================== ====================== ======================
Invests in equity Provides access Specialised, Separates and
and equity-related to private equity, efficient, all-in-one centralises
instruments healthcare, access to a the currency
within the Emerging infrastructure, long-term strategic risk of an underlying
Markets including special situations, asset allocation Emerging Markets
global, regional, distressed debt across the full asset class
country, small and real estate Emerging Markets in order to
cap and frontier investment opportunities. investment universe. manage it effectively
opportunities. and efficiently.
======================== =========================== ====================== ======================
External debt
The EMBI GD external debt index fell 0.5% over the period, but
supported by US dollar strength it performed better than other
major Emerging Markets indices. Despite the periodic market
weakness, and some credit rating changes, high yield (HY) assets
delivered positive returns of +1.2% with investment grade (IG)
bonds falling 1.7%.
While Ashmore's external debt portfolios had some
underperformance arising from the market volatility in the six
months, the investment process added risk and delivered good
returns when market conditions stabilised. Over three years, the
Group's external debt broad composite has returned -0.7% annualised
versus +1.0% for the EMBI GD benchmark index.
The EMBI GD currently yields approximately 6.5% at the index
level and has a spread over 10 year US Treasuries of 490bps, which
points to substantial value being available in the asset class and
suggests that, in aggregate, the market has priced in foreseeable
US rate increases.
Local currency
The unhedged GBI-EM GD index declined 10.6% over the period,
with the underperformance due to the strength of the US dollar; on
a hedged basis, the index returned 1.0%. The diversity of the local
currency asset class continues to be important, as demonstrated by
the wide range of unhedged country returns over the six months,
from +24% for Nigeria to -26% for South Africa.
The outflows experienced in local currency were largely
attributable to the weak asset class performance resulting from the
persistent strength of the US dollar against a range of Emerging
Markets currencies. Over three years, the Group's local currency
bonds composite has performed broadly in line with the benchmark
index, returning -10.4% annualised versus -10.0% for the GBI-EM GD
index.
An index yield currently of nearly 7% and attractive carry
available from a diverse range of Emerging Markets currencies
suggest that the asset class provides good value. The primary
headwind it has faced in recent years has been the relative
strength of the US dollar, which has more than offset the bond
returns. It is unlikely that the US economy can continue to
withstand 10% per annum appreciation in its currency and so there
are good prospects for Emerging Markets currencies to contribute to
local currency theme performance.
Corporate debt
In contrast to external debt, corporate high yield credit
underperformed investment grade assets. The CEMBI BD index fell by
2.3% during the six months, with the HY component declining 5.0%
and IG bonds falling 0.9%. While the US high yield credit market
serves as a reference for prices of Emerging Markets high yield
credit, the latter has outperformed as US high yield bonds fell
7.5% over the period.
While corporate debt experienced net outflows over the six
months, these were influenced by a number of relatively large
segregated account redemptions. Over three years, the Group's
corporate debt composite has returned -1.5% annualised versus +1.9%
for the CEMBI BD benchmark index, and the investment grade
composite has returned +1.7% annualised versus +2.3% for the CEMBI
BD IG benchmark.
Industry-wide corporate default rates remain in line with
long-run averages, and the Group's portfolios are outperforming the
benchmark index on this measure. Therefore the Group's investment
returns have thus far been mostly influenced by mark-to-market
price adjustments rather than credit losses. A primary
consideration when investing in hard currency corporate credit is
to determine the availability and strength of foreign currency cash
flows to support coupon and interest payments. So, while rising US
interest rates may cause some pressure in certain parts of the
Emerging Markets corporate debt universe, the diversity of the
asset class provides sufficient investment opportunities where it
is possible to identify the protection afforded by factors such as
export-related revenue streams, FX hedging, remittances by overseas
subsidiaries, and government support.
Blended debt
The blended debt benchmark (50% EMBI GD, 25% GBI-EM GD, 25%
ELMI+) returned -4.6% over the six-month period.
Similar to corporate debt, the net outflows in blended debt were
dominated by a small number of segregated account withdrawals. The
underweight FX position in blended debt funds has benefited
relative returns over the six months, demonstrating the merits of
active management. Over three years, the Group's blended debt
composite has returned -2.7% annualised versus -3.5% for the
standard benchmark.
The attraction of blended debt is clear for first time
allocators to Emerging Markets, as it provides broad but
dynamically-managed exposure to fixed income markets. It is also
relevant to more experienced Emerging Markets investors as it
allows the application of bespoke performance benchmarks.
Therefore, the Group expects demand for blended debt products to
come from a wide range of investor types, both retail and
institutional.
Equities
Equities underperformed fixed income during the period, with the
MSCI EM (net) index falling 17.4% and the MSCI Small Cap (net)
index declining 14.0%.
The Group's range of focused, specialist equity funds performed
well relative to their respective benchmarks over the six-month
period. There is substantial three-year annualised outperformance
in the Global Small Cap, Pan Africa, India and Middle East
composites, which together account for US$2.0 billion or 63% of AuM
in the Equities theme. Several of the specialist funds, notably the
Middle East, Frontier Markets and Africa funds, feature in Pensions
& Investments' top 10 ranking of Emerging Markets equity funds
over five years, with the Middle East fund the best performing fund
over that time period.
The market headwinds of the past couple of years have resulted
in many value opportunities in Emerging Markets equities,
particularly where the share prices of strong local businesses have
declined along with those directly affected by the external
environment. Therefore, against a backdrop of attractive
valuations, selective stock-picking and active management will be
the deciding factors in generating returns in 2016.
Alternatives
AuM increased during the period, from US$0.8 billion to US$1.4
billion, as capital raising in the infrastructure and healthcare
sub-themes contributed approximately US$0.6 billion, which more
than offset the planned return of capital to investors from
existing funds. Investment performance added US$0.1 billion in the
period.
The capital raised diversifies revenues, is locked up, and is
beneficial to the Group's net management fee margin, albeit that
the characteristics of the infrastructure fund, being very long
term (25 years) and investing in senior debt, means that its
management fee margin is lower than the existing private equity
infrastructure and real-estate funds in the alternatives theme. At
the period end, the run-rate net management fee margin for the
theme was approximately 135 bps.
The Group continues to see opportunities to grow the
alternatives theme by providing clients with access to long-term
growth trends in Emerging Markets, particularly in areas such as
infrastructure and healthcare provision.
Multi-asset
Multi-asset AuM reduced by US$0.4 billion over the six months,
equally split between net outflows and investment performance. AuM
in the Group's Japanese retail funds continued to reduce as
expected, albeit at a slower pace, and these funds now represent
only US$0.6 billion of AuM in the theme (30 June 2015: US$1.0
billion). Similar to blended debt, but with the important inclusion
of the equities asset class, the multi-asset theme offers investors
exposure to a broad range of actively-managed investment themes,
thereby increasing diversification and offering potentially higher
returns through the cycle.
Overlay/liquidity
AuM in the overlay/liquidity theme increased by US$0.1 billion
during the period as a result of net inflows of US$0.3 billion from
existing clients, offset by negative performance of US$0.2
billion.
Market outlook
In December, the US Federal Reserve raised its target rate for
the first time in nine years. Importantly, this occurred nearly
three years after it had signalled an end to its quantitative
easing (QE) and as a consequence markets had plenty of time to
adapt. Emerging Markets pricing had adjusted accordingly to leave
substantial value across the asset classes, and particularly when
compared with the QE-inflated price levels evident in many
Developed Markets.
Index yields of approximately 7% are currently available on
Emerging Markets government bonds, which are comparable to the
yields prevailing at the end of the previous Fed rate cycle in 2006
when the target rate was 5.25%. The potential returns from Emerging
Markets fixed income are attractive, both in absolute terms and
relative to the alternatives in Developed Markets.
(MORE TO FOLLOW) Dow Jones Newswires
February 11, 2016 02:00 ET (07:00 GMT)
Higher US interest rates will inevitably cause pressure in some
areas, particularly where countries or companies have too much debt
or inappropriate funding structures. Yet these situations are no
longer as common as they once were. The Emerging Markets have faced
a number of significant headwinds over the past few years, such as
substantial commodity price declines, capital outflows leading to
higher funding costs, FX depreciation against the US dollar, and
elections in many of the major economies. However, there have been
only two sovereign defaults (Argentina and Ukraine) for reasons
largely unrelated to those headwinds. In corporate credit, these
headwinds have thus far not resulted in a significant increase in
defaults; the high-yield corporate default rate of 3.1% at the end
of 2015 is below the long-run average of 3.9%, and is also below
the equivalent figure for the US high yield market of 3.4%.
The economic fundamentals in Emerging Markets are in robust
shape: average GDP growth is expected by the IMF to accelerate in
2016, from 4.0% to 4.3%, twice the rate expected for Developed
Markets; inflation is typically at a reasonable level, between 4%
and 5% on average; and central banks have built substantial FX
reserves, equivalent to an estimated two-thirds of the world total
of US$11 trillion, to provide policy flexibility as currencies
fluctuate. While commodity price weakness will remain a challenge
for some countries and companies, lower prices are a benefit to
two-thirds of the major Emerging Market economies. Improving
current accounts across the majority of the large Emerging Market
countries follow a period of classical and significant macro
adjustments.
The Fed's actions have provided greater clarity over the likely
near-term trajectory of US interest rates, and so investors can
look to Emerging Markets for value, yield and uncorrelated returns.
Ashmore's investment processes have performed as expected through
the recent market turbulence, acquiring risk where prices have
become divorced from fundamentals, and consequently the Group is in
a good position to capture allocations as sentiment towards
Emerging Markets recovers.
Strategy/business developments
As described in the Market review, the alternatives theme has
grown significantly during the six-month period with capital being
raised into two new vehicles. These investments will capitalise on
the substantial growth and return opportunities available from two
of the important long-term trends in Emerging Markets as they
converge with the developed world: the construction of
infrastructure, and the provision of broader and more sophisticated
healthcare services. Funds in the alternatives theme provide the
Group with high margin management fees derived from long-term,
locked-up capital structures and they typically have the ability to
earn carry or performance-related fees over their lives.
In Colombia, the Group established a joint venture with
Corporación Andina de Fomento (CAF) and raised approximately US$460
million from local and international investors into a new 25-year
infrastructure senior debt fund, the first of its kind in the
region. This follows the Group's success with an infrastructure
private equity fund in Colombia, which was launched in 2010.
In November, Ashmore raised capital to fund healthcare
investments in the United Arab Emirates (UAE), including a project
to build and operate a hospital and clinics in Dubai, in
combination with King's College Hospital and local equity partners.
This structure provides a template for similar projects across the
Emerging Markets where the development of healthcare infrastructure
is an important long-term trend.
Also in the UAE, in November, the Group opened an office in
Dubai to support its plans for growth in assets sourced and managed
across the broader Gulf Cooperation Council (GCC) region.
During the period, Ashmore agreed the terms of a transaction
whereby Taiping Group, one of the largest insurance companies in
China, will take a majority stake in Ashmore's Shanghai-based China
fund management joint venture. Ashmore will retain a 15% interest
in the joint venture and believes that the introduction of Taiping
Group as a new shareholder will bring material benefits in the form
of improved distribution access and support for product launches.
The transaction is subject to regulatory approval and is expected
to complete in the current financial year.
AuM development
As at 31 December 2015, assets under management were US$49.4
billion, a decline of US$9.5 billion, or 16%, during the six months
as a result of net outflows of US$5.7 billion and negative
investment performance of US$3.8 billion. Average AuM of US$53.6
billion fell by 25% compared with the same period in the prior
year.
Gross subscriptions were US$3.4 billion (H1 2014/15: US$5.3
billion) with demand continuing to be broadly spread across
investment themes, client types and geographies, and with a good
mix of new client inflows and increases to existing mandates.
Redemptions were US$9.1 billion (H1 2014/15: US$9.8 billion) or
15% of opening AuM (H1 2014/15: 13%). Redemptions remained at a
similar level to the prior year period due to a small number of
relatively large segregated account redemptions in the first
quarter.
The Group's client base remains predominantly institutional,
with 91% of AuM from such clients (30 June 2015: 91%) and the
remainder sourced through intermediaries, which provide the Group
with access to retail investors.
Segregated accounts represent 72% of AuM (30 June 2015: 69%).
Ashmore's principal mutual fund platforms are in Europe and the US,
which together account for 13% of AuM (30 June 2015: 15%). The
European SICAV range comprises 33 funds with AuM of US$5.5 billion
(30 June 2015: US$7.8 billion in 36 funds) and the US 40-Act range
has 10 funds with AuM of US$1.0 billion (30 June 2015: US$1.2
billion in nine funds).
Investment performance
Over one year, 55% of the Group's AuM are outperforming relevant
benchmarks (30 June 2015: 23%), with the improvement coming from
the alpha generated by adding risk in periods of market weakness
over the past 18 months.
Over three and five years, 14% and 64% of AuM are outperforming
relevant benchmarks, respectively (30 June 2015: 60% and 81%,
respectively). Ashmore's value-based investment processes added
risk in the period, where price volatility and weakness resulted in
mispricing of credits when assessed against their underlying
fundamentals. This can typically lead to some short-term
underperformance as the decisions are usually implemented prior to
markets recovering. Specifically in this half, high yield markets
in particular offered opportunities to acquire risk at attractive
prices.
Additionally, some strong relative performance periods have
dropped out of the longer-term measurements, such as those achieved
in the market recoveries of 2010 and 2012. More recent
outperformance has typically been at lower levels, consistent with
the volatile market backdrop that has prevailed for much of the
past three years.
AuM movements by investment theme as classified by mandate
The development during the period of AuM by theme as classified
by mandate is shown in the following table. The reclassification
from corporate debt to blended debt follows a change in investment
guidelines for those assets.
AuM
AuM Gross Gross 31 December
30 June 2015 subscriptions redemptions Net flows Performance Reclassification 2015
Investment theme US$bn US$bn US$bn US$bn US$bn US$bn US$bn
================== ============= ============= ============ ========= =========== ================ ============
External debt 12.0 0.5 (1.5) (1.0) (0.2) - 10.8
Local currency 15.2 0.6 (2.5) (1.9) (1.3) - 12.0
Corporate debt 7.2 0.4 (1.6) (1.2) (0.5) (0.7) 4.8
Blended debt 15.7 0.5 (2.6) (2.1) (1.0) 0.7 13.3
Equities 3.8 0.3 (0.4) (0.1) (0.5) - 3.2
Alternatives 0.8 0.6 (0.1) 0.5 0.1 - 1.4
Multi-asset 1.6 0.1 (0.3) (0.2) (0.2) - 1.2
Overlay/liquidity 2.6 0.4 (0.1) 0.3 (0.2) - 2.7
================== ============= ============= ============ ========= =========== ================ ============
Total 58.9 3.4 (9.1) (5.7) (3.8) - 49.4
================== ============= ============= ============ ========= =========== ================ ============
AuM % by investment theme as classified by mandate and as
invested
(MORE TO FOLLOW) Dow Jones Newswires
February 11, 2016 02:00 ET (07:00 GMT)
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-asset and blended debt themes, and the cross-over investment
by certain external debt funds.
AuM at 30 June 2015 AuM at 31 December 2015
======================================= =======================================
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 20 36 21.1 22 37 18.2
Local currency 26 31 17.9 24 28 14.0
Corporate debt 12 20 11.8 10 18 8.6
Blended debt 27 - - 27 - -
Equities 7 7 4.3 7 7 3.5
Alternatives 1 2 1.2 3 3 1.7
Multi-asset 3 - - 2 - -
Overlay/liquidity 4 4 2.6 5 7 3.4
================== =========== ============ ============ =========== ============ ============
Total 100 100 58.9 100 100 49.4
================== =========== ============ ============ =========== ============ ============
Financial review
Revenues
Net revenue declined 29% to GBP116.4 million from GBP164.0
million, primarily as a result of lower net management fee income
and a lower contribution from foreign exchange translation.
The Group's management fee income, net of distribution costs,
was GBP98.7 million, a decline of 26% over the prior year period
(H1 2014/15: GBP133.0 million). The lower level of fee income is
mostly attributable to the 25% reduction in average AuM. There was
a modest decline in the net management fee margin to 57bps (H1
2014/15: 60bps; H2 2014/15: 58bps), with the prior year period
margin of 60bps benefiting by 1bp from the release of an accrual
following the renegotiation of a distribution agreement. The margin
decline was offset by a favourable movement in the average GBP:USD
rate compared with the prior year period.
Performance fees of GBP8.6 million (H1 2014/15: GBP7.0 million)
were delivered in the period, largely from the realisation of fees
on investments in the alternatives theme. At 31 December 2015, 14%
of the Group's AuM were eligible to earn performance fees (30 June
2015: 13%).
Translation of the Group's non-Sterling assets and liabilities
at the period end resulted in a foreign exchange gain of GBP8.0
million (H1 2014/15: GBP20.1 million), principally reflecting
continued US dollar strength against Sterling. The Group recognised
net realised and unrealised hedging losses of GBP1.0 million (H1
2014/15: GBP1.3 million gain).
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 2015/16 H1 2014/15 H1 2015/16 H1 2014/15 H1 2015/16 H1 2014/15
Investment theme GBPm GBPm GBPm GBPm bps bps
================== ========== ========== ========== ========== ========== ==========
External debt 19.9 23.6 0.1 6.8 54 57
Local currency 19.8 24.5 - - 45 46
Corporate debt 11.3 15.9 - - 59 64
Blended debt 25.6 35.0 - 0.1 54 56
Equities 11.5 16.6 - 0.1 106 98
Alternatives 5.0 7.9 8.5 - 165 166
Multi-asset 4.2 7.8 - - 98 106
Overlay/liquidity 1.4 1.7 - - 17 19
================== ========== ========== ========== ========== ========== ==========
Total 98.7 133.0 8.6 7.0 57 60
================== ========== ========== ========== ========== ========== ==========
Operating costs
Total operating costs declined by 16% compared with the prior
year, from GBP55.1 million to GBP46.3 million, as the charge for
variable compensation reduced in response to lower revenues.
Operating costs excluding variable compensation increased by 4%
to GBP28.8 million, or by 2% excluding the costs borne by
consolidated funds, which are described below.
Fixed staff costs of GBP12.1 million fell by 2% compared with
the prior year (H1 2014/15: GBP12.4 million), with average
headcount falling 6% versus the prior year. During the six-month
period the Group's headcount declined slightly, from 285 to 280
employees.
Other operating costs, excluding depreciation and amortisation,
increased by GBP1.3 million to GBP14.2 million. The increase
excluding the effects of consolidated funds was GBP0.7 million, and
was principally driven by non-recurring professional fees.
As is usual, variable compensation at the half year has been
accrued at 20% of earnings before variable compensation, interest
and tax, resulting in a charge of GBP17.5 million (H1 2014/15:
GBP27.5 million).
The combined depreciation and amortisation charge for the period
was GBP2.5 million (H1 2014/15: GBP2.3 million).
The Group will remain focused on controlling its operating costs
against the backdrop of a challenging market environment.
Adjusted EBITDA
Adjusted EBITDA, which reclassifies items relating to seed
capital investments and foreign exchange translation effects, is
29% lower at GBP68.0 million for the period (H1 2014/15: GBP96.3
million), principally reflecting the 25% lower level of average AuM
and therefore net management fee income in the period. The adjusted
EBITDA margin, which reflects operating performance, was 63% (H1
2014/15: 67%).
Finance income
Net finance income of GBP6.1 million (H1 2014/15: GBP6.5 million
expense) includes items relating to seed capital investments, which
are described in more detail below. Interest income for the period
was GBP1.0 million (H1 2014/15: GBP0.8 million).
Taxation
The majority of the Group's profit is subject to UK taxation; of
the total current tax charge for the period of GBP14.0 million (H1
2014/15: GBP24.0 million), GBP13.2 million relates to UK
corporation tax (H1 2014/15: GBP21.3 million). The Group's
effective tax rate for the period is 24.9% (H1 2014/15: 24.8%),
which is higher than the blended UK corporation tax rate of 20.0%,
primarily due to certain non-deductible expenses including those
relating to the treatment of share-based payments. Note 9 to the
interim condensed financial statements provides a full
reconciliation of this deviation from the blended UK corporation
tax rate.
Balance sheet, cash flow and foreign exchange
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 2015, total equity attributable to
shareholders of the parent was GBP619.2 million (31 December 2014:
GBP620.8 million, 30 June 2015: GBP656.1 million). Financial
resources available to the Group totalled GBP549.3 million as at 31
December 2015, equivalent to 77 pence per share, and significantly
exceeded the Group's regulatory capital requirement of GBP94.4
million, equivalent to 13 pence per share. 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 GBP57.6 million for
the period (H1 2014/15: GBP105.4 million), the Group generated cash
of GBP67.9 million before working capital changes (H1 2014/15:
GBP115.2 million) and GBP56.9 million of cash from operations (H1
2014/15: GBP92.2 million).
Cash and cash equivalents by currency
31 December 30 June
2015 2015
GBPm GBPm
========== =========== =======
Sterling 160.1 205.0
US dollar 148.3 152.7
Other 33.1 23.1
=========== =========== =======
Total 341.5 380.8
=========== =========== =======
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.
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February 11, 2016 02:00 ET (07:00 GMT)
During the period, the Group recognised a foreign exchange gain
in revenues of GBP8.0 million (H1 2014/15: GBP20.1 million), which
resulted primarily from the effect of US dollar strength against
Sterling, and net realised and unrealised hedging losses of GBP1.0
million (H1 2014/15: GBP1.3 million gain). The Group sold US$100
million of its US dollar cash holdings as the exchange rate
continued to move in its favour over the six months.
The average GBP:USD rate achieved in the period was 1.5291 (H1
2014/15: 1.6289) and the closing rate on 31 December 2015 was
1.4736 (30 June 2015: 1.5712). Based on the period end balance
sheet, for every five cents move in the GBP:USD rate there would be
approximately a GBP6.5 million effect on the Group's profit before
tax. This comprises a seed capital contribution through finance
income of GBP1.5 million and the effect of translating other
non-Sterling balance sheet items of GBP5.0 million recognised in
revenues.
Seed capital investments
As at 31 December 2015, the amount invested in seed capital was
GBP200.8 million (at cost) with a market value of GBP195.2 million
(30 June 2015: GBP213.3 million at cost; GBP207.0 million market
value). The Group manages its seed capital actively and during the
period it made new investments of GBP14.7 million and realised
GBP27.1 million from previous investments. Additionally, new
commitments totalling approximately GBP20 million were made during
the six months. These have been made in order to support growth in
third-party AuM and were substantially undrawn at the period end.
Funds that have been historically seeded by the Group represent 10%
of the Group's AuM.
The 'at cost' investment represents 37% of Group net tangible
equity (30 June 2015: 37%) and the majority of the Group's seed
capital is held in liquid funds, such as daily-dealing SICAVs or US
40-Act mutual funds.
Seed capital by currency
31 December 30 June
2015 2015
GBPm GBPm
============= =========== =======
US dollar 146.3 150.1
Indonesian
rupiah 36.4 36.5
Brazilian
real - 7.0
Other 12.5 13.4
============== =========== =======
Total market
value 195.2 207.0
============== =========== =======
Seed capital activities resulted in a loss before tax of GBP9.2
million (H1 201415: GBP1.0 million gain). This result comprises the
financial results of consolidated funds, which are recognised in
various lines in the statement of comprehensive income, and the
financial effects of other funds, which are recognised in finance
income and expense. This loss was substantially matched in the
period by a total gain of GBP8.8 million relating to seed capital
activities that has been taken to reserves.
Where the Group's seeding activity leads to a controlling
interest in a fund, in accordance with IFRS 10 it is consolidated
in full. During the period, consolidated funds generated
mark-to-market losses before tax of GBP3.9 million (H1 2014/15:
GBP2.4 million loss), comprising losses on investment securities of
GBP19.5 million, change in third-party interests gain of GBP7.0
million, operating expenses of GBP1.8 million, and finance income
of GBP10.4 million.
Net finance income includes seed capital-related losses of
GBP5.3 million (H1 2014/15: GBP3.4 million gain), comprising a
negative but largely unrealised investment return of GBP4.4 million
and foreign exchange losses of GBP0.9 million.
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.
Board changes
Michael Benson retired from the Board at the Group's AGM on 22
October 2015 after nine years' diligent and valuable service. Peter
Gibbs succeeded Michael as Group Chairman.
Clive Adamson was appointed to the Board as a Non-executive
Director on 22 October 2015, and has been appointed to the Audit
and Risk Committee.
Dividend
The Group intends to pay a progressive ordinary dividend over
time, taking into consideration factors such as prospects for the
Group's earnings, demands on the Group's financial resources, and
the markets in which the Group operates.
The Board has determined that an interim dividend of 4.55 pence
per share (H1 2014/15: 4.55 pence per share) will be paid on 1
April 2016 to all shareholders on the register on 4 March 2016.
Mark Coombs
Chief Executive Officer
10 February 2016
Interim condensed consolidated statement of comprehensive
income
For the six months ended 31 December 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2015 2014 2015
Notes GBPm GBPm GBPm
========================================== ===== ============ ============ ==========
Management fees 99.3 134.8 250.2
Performance fees 8.6 7.0 13.3
Other revenue 2.1 2.6 4.6
========================================== ===== ============ ============ ==========
Total revenue 5 110.0 144.4 268.1
Distribution costs (0.6) (1.8) (2.9)
Foreign exchange 6 7.0 21.4 18.1
========================================== ===== ============ ============ ==========
Net revenue 116.4 164.0 283.3
Losses on investment securities 14 (19.5) (5.2) (3.6)
Change in third-party interests
in consolidated funds 14 7.0 1.7 0.8
Personnel expenses (29.6) (39.9) (67.2)
Other expenses (16.7) (15.2) (32.3)
========================================== ===== ============ ============ ==========
Operating profit 57.6 105.4 181.0
Finance income 7 11.4 6.8 7.0
Finance expense 7 (5.3) (0.3) (5.1)
Share of losses from associates
and joint ventures (1.0) (1.2) (1.6)
========================================== ===== ============ ============ ==========
Profit before tax 62.7 110.7 181.3
Tax expense 9 (15.6) (27.4) (41.3)
========================================== ===== ============ ============ ==========
Profit for the period 47.1 83.3 140.0
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 13.6 13.1 9.7
Fair value reserve (available-for-sale
financial assets):
Net change in fair value 0.7 2.9 3.2
Net amount transferred to profit
or loss 0.2 (2.4) (1.1)
Cash flow hedge intrinsic value
losses (0.4) (4.2) (1.9)
========================================== ===== ============ ============ ==========
Other comprehensive income,
net of tax 14.1 9.4 9.9
========================================== ===== ============ ============ ==========
Total comprehensive income
for the period 61.2 92.7 149.9
========================================== ===== ============ ============ ==========
Profit attributable to:
Equity holders of the parent 46.4 81.0 136.5
Non-controlling interests 0.7 2.3 3.5
========================================== ===== ============ ============ ==========
Profit for the period 47.1 83.3 140.0
========================================== ===== ============ ============ ==========
Total comprehensive income
attributable to:
Equity holders of the parent 60.3 89.6 145.7
Non-controlling interests 0.9 3.1 4.2
========================================== ===== ============ ============ ==========
Total comprehensive income
for the period 61.2 92.7 149.9
========================================== ===== ============ ============ ==========
Earnings per share
Basic 10 6.89p 12.02p 20.26p
Diluted 10 6.52p 11.50p 19.34p
========================================== ===== ============ ============ ==========
Interim condensed consolidated balance sheet
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February 11, 2016 02:00 ET (07:00 GMT)
As at 31 December 2015
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
Notes GBPm GBPm GBPm
====================================== ===== ============ ============ ========
Assets
Non-current assets
Goodwill and intangible assets 12 76.6 76.8 74.1
Property, plant and equipment 2.0 3.0 2.5
Investment in associates and
joint ventures 6.4 7.9 7.3
Non-current asset investments 14 8.8 9.6 8.9
Other receivables 0.2 0.2 0.2
Deferred tax assets 19.7 16.6 20.3
====================================== ===== ============ ============ ========
113.7 114.1 113.3
====================================== ===== ============ ============ ========
Current assets
Investment securities 14 140.5 194.9 131.0
Available-for-sale financial
assets 14 8.8 15.8 10.6
Fair value through profit
or loss investments 14 67.0 16.8 61.8
Trade and other receivables 61.7 82.2 64.0
Derivative financial instruments - 0.1 0.3
Cash and cash equivalents 341.5 386.0 380.8
====================================== ===== ============ ============ ========
619.5 695.8 648.5
====================================== ===== ============ ============ ========
Non-current assets held-for-sale 14 22.5 57.6 31.7
====================================== ===== ============ ============ ========
Total assets 755.7 867.5 793.5
====================================== ===== ============ ============ ========
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 598.5 614.6 649.3
Foreign exchange reserve 7.8 (2.3) (5.6)
Available-for-sale fair value
reserve (2.3) (4.8) (3.2)
Cash flow hedging reserve (0.5) (2.4) (0.1)
====================================== ===== ============ ============ ========
619.2 620.8 656.1
Non-controlling interests 13.1 18.2 14.0
====================================== ===== ============ ============ ========
Total equity 632.3 639.0 670.1
====================================== ===== ============ ============ ========
Liabilities
Non-current liabilities
Deferred tax liabilities 4.2 3.2 3.5
====================================== ===== ============ ============ ========
4.2 3.2 3.5
====================================== ===== ============ ============ ========
Current liabilities
Current tax 14.0 17.6 13.0
Third-party interests in consolidated
funds 14 58.5 106.7 41.5
Derivative financial instruments 1.3 4.0 0.3
Trade and other payables 39.5 70.2 54.1
====================================== ===== ============ ============ ========
113.3 198.5 108.9
====================================== ===== ============ ============ ========
Non-current liabilities held-for-sale 14 5.9 26.8 11.0
====================================== ===== ============ ============ ========
Total liabilities 123.4 228.5 123.4
====================================== ===== ============ ============ ========
Total equity and liabilities 755.7 867.5 793.5
====================================== ===== ============ ============ ========
Interim condensed consolidated statement of changes in
equity
For the six months ended 31 December 2015
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 2014 - 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 loss
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
losses - - - - - (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) - (11.0)
Acquisition of
non-controlling
interests - - - - - - - (0.9) (0.9)
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
Profit for the period - - 55.5 - - - 55.5 1.2 56.7
Other comprehensive
income/(loss):
Foreign currency
translation
differences
arising on foreign
operations - - - (3.3) - - (3.3) (0.1) (3.4)
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 - - - - 1.3 - 1.3 - 1.3
Cash flow hedge
intrinsic value
gains - - - - - 2.3 2.3 - 2.3
---------------------- ------- ------- -------- -------- ------------------ ------- ------ --------------- ------
Total comprehensive
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February 11, 2016 02:00 ET (07:00 GMT)
income/(loss) - - 55.5 (3.3) 1.6 2.3 56.1 1.1 57.2
Transactions with
owners:
Purchase of own
shares - - (0.4) - - - (0.4) - (0.4)
Share-based
payments - - 10.9 - - - 10.9 (1.8) 9.1
Dividends to equity
holders - - (31.3) - - - (31.3) - (31.3)
Dividends to
non-controlling
interests - - - - - - - (3.5) (3.5)
====================== ======= ======= ======== ======== ================== ======= ====== =============== ======
Total contributions
and distributions - - (20.8) - - - (20.8) (5.3) (26.1)
====================== ======= ======= ======== ======== ================== ======= ====== =============== ======
Audited balance
at 30 June 2015 - 15.7 649.3 (5.6) (3.2) (0.1) 656.1 14.0 670.1
Profit for the period - - 46.4 - - - 46.4 0.7 47.1
Other comprehensive
income/(loss):
Foreign currency
translation
differences
arising on foreign
operations - - - 13.4 - - 13.4 0.2 13.6
Net fair value
gains
on
available-for-sale
assets including
tax - - - - 0.7 - 0.7 - 0.7
Net gains
reclassified
from
available-for-sale
reserve to
comprehensive
income - - - - 0.2 - 0.2 - 0.2
Cash flow hedge
intrinsic value
losses - - - - - (0.4) (0.4) - (0.4)
---------------------- ------- ------- -------- -------- ------------------ ------- ------ --------------- ------
Total comprehensive
income/(loss) - - 46.4 13.4 0.9 (0.4) 60.3 0.9 61.2
Transactions with
owners:
Purchase of own
shares - - (14.7) - - - (14.7) - (14.7)
Acquisition of
non-controlling
interests - - - - - - - (0.4) (0.4)
Sale to
non-controlling
interests - - - - - - - 0.4 0.4
Share-based
payments - - 2.0 - - - 2.0 0.7 2.7
Dividends to equity
holders - - (84.5) - - - (84.5) - (84.5)
Dividends to
non-controlling
interests - - - - - - - (2.5) (2.5)
====================== ======= ======= ======== ======== ================== ======= ====== =============== ======
Total contributions
and distributions - - (97.2) - - - (97.2) (1.8) (99.0)
====================== ======= ======= ======== ======== ================== ======= ====== =============== ======
Unaudited balance
at 31 December 2015 - 15.7 598.5 7.8 (2.3) (0.5) 619.2 13.1 632.3
====================== ======= ======= ======== ======== ================== ======= ====== =============== ======
Interim condensed consolidated cash flow statement
For the six months ended 31 December 2015
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
========================================================== ============ ============ ==========
Operating activities
Operating profit 57.6 105.4 181.0
Adjustments for non-cash items:
Depreciation and amortisation 2.5 2.3 5.3
Accrual for variable compensation 17.5 27.5 42.4
Unrealised foreign exchange gains (8.0) (21.4) (17.7)
Other non-cash items (1.7) 1.4 4.2
========================================================== ============ ============ ==========
Cash generated from operations before working capital
changes 67.9 115.2 215.2
Changes in working capital:
Decrease/(increase) in trade and other receivables 2.3 (12.5) 5.7
Decrease in derivative financial instruments 1.3 6.3 2.4
Decrease in trade and other payables (14.6) (16.8) (32.9)
========================================================== ============ ============ ==========
Cash generated from operations 56.9 92.2 190.4
Taxes paid (14.2) (22.6) (44.7)
========================================================== ============ ============ ==========
Net cash from operating activities 42.7 69.6 145.7
========================================================== ============ ============ ==========
Investing activities
Interest received 3.4 2.0 4.1
Dividends received - 0.7 1.8
Proceeds on disposal of associates - 0.6 0.6
Purchase of non-current asset investments (1.7) (0.1) (0.3)
Purchase of financial assets held-for-sale (7.8) (9.4) (21.8)
Purchase of available-for-sale financial assets (0.2) - -
Purchase of fair value through profit or loss investments (1.0) (2.0) (2.0)
Purchase of investment securities (39.6) (43.6) (77.0)
Sale of non-current asset investments - 0.1 0.4
Sale of financial assets held-for-sale 3.9 - -
Sale of available-for-sale financial assets 2.9 3.7 20.8
Sale of fair value through profit or loss investments 1.4 4.9 10.1
Sale of investment securities 27.4 14.0 30.1
Net cash flow arising on initial consolidation of
seed capital investments 0.3 0.5 (6.8)
Purchase of property, plant and equipment (0.1) (0.5) (0.7)
========================================================== ============ ============ ==========
Net cash used in investing activities (11.1) (29.1) (40.7)
========================================================== ============ ============ ==========
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
======================================================= ============ ============ ==========
Financing activities
Dividends paid to equity holders (84.5) (82.7) (114.0)
Dividends paid to non-controlling interests (2.5) (2.6) (6.1)
Third-party subscriptions into consolidated funds 39.0 91.3 34.0
Third-party redemptions from consolidated funds (18.3) (43.8) (15.8)
Acquisition of interest from non-controlling interests (0.4) - (0.9)
Sale of interest to non-controlling interests 0.4 - -
Purchase of own shares (14.7) (11.9) (11.4)
======================================================= ============ ============ ==========
Net cash used in financing activities (81.0) (49.7) (114.2)
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February 11, 2016 02:00 ET (07:00 GMT)
======================================================= ============ ============ ==========
Net (decrease)/increase in cash and cash equivalents (49.4) (9.2) 9.2
Cash and cash equivalents at beginning of period 380.8 372.2 372.2
Effect of exchange rate changes on cash and cash
equivalents 10.1 23.0 17.8
======================================================= ============ ============ ==========
Cash and cash equivalents at end of period 341.5 386.0 380.8
======================================================= ============ ============ ==========
Cash and cash equivalents comprise:
Cash at bank and in hand 98.6 90.4 84.5
Daily dealing liquidity funds 92.5 172.9 109.6
Deposits 150.4 122.7 186.7
======================================================= ============ ============ ==========
341.5 386.0 380.8
======================================================= ============ ============ ==========
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 2015 were authorised for issue by the
Directors on 10 February 2016.
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 2015 which are available on the Group's
website. Those statutory accounts were approved by the Board of
Directors on 7 September 2015 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 2015.
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 2015:
- 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 2015.
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 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 the
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
2015 2014 2015
GBPm GBPm GBPm
========================= ============ ============ ========
United Kingdom 11.2 12.5 12.4
United States 73.3 74.6 70.9
Other 0.5 0.6 0.6
========================= ============ ============ ========
Total non-current assets 85.0 87.7 83.9
========================= ============ ============ ========
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
2014/15: none; FY2014/15: 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
2015 2014 2015
GBPm GBPm GBPm
============================== ============ ============ =========
United Kingdom earned revenue 101.7 130.8 247.3
United States earned revenue 4.8 10.9 14.4
Other 3.5 2.7 6.4
============================== ============ ============ =========
Total revenue 110.0 144.4 268.1
============================== ============ ============ =========
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
GBP1 2015 2014 2015 2015 2014 2015
================== ============ ============ ============ ============ ============ ============
US dollar 1.4736 1.5577 1.5712 1.5291 1.6289 1.5822
Brazilian real 5.8370 4.1398 4.8744 5.6235 3.9149 4.2257
Indonesian rupiah 20,462 19,287 20,970 21,171 19,536 19,713
================== ============ ============ ============ ============ ============ ============
Foreign exchange gains and losses are shown below.
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
======================================================= ============= ============ =========
Net realised and unrealised hedging gains/(losses) (1.0) 1.3 (0.4)
Translation gains on non-Sterling denominated monetary
assets and liabilities 8.0 20.1 18.5
======================================================= ============= ============ =========
Total foreign exchange gains/(losses) 7.0 21.4 18.1
======================================================= ============= ============ =========
7) Finance income and expense
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
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February 11, 2016 02:00 ET (07:00 GMT)
============================================================ ============= ============= =========
Finance income
Interest and income in consolidated funds 11.4 3.1 7.0
Net gains on disposal of available-for-sale financial
assets - 2.4 -
Net unrealised gains on seed capital investments
measured at fair value - 1.3 -
Total finance income 11.4 6.8 7.0
Finance expense
Net realised losses on disposal of available-for-sale
financial assets (0.2) - (0.2)
Net realised losses on disposal of seed capital investments
measured at fair value (1.7) (0.3) (1.2)
Net unrealised losses on seed capital investments
measured at fair value (3.4) - (3.7)
============================================================ ============= ============= =========
Total finance expense (5.3) (0.3) (5.1)
============================================================ ============= ============= =========
Net finance income 6.1 6.5 1.9
============================================================ ============= ============= =========
8) Share-based payments
The total share-based payments-related cost recognised by the
Group in the interim condensed consolidated statement of
comprehensive income is shown below:
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
======================================================= ============= ============= =========
Omnibus Plan 9.3 6.9 25.0
Ashmore Equities Investment Management (US) LLC (AEIM)
operating agreement 0.1 0.2 1.6
Phantom Bonus Plan (0.2) - (2.1)
======================================================= ============= ============= =========
Total related to compensation awards 9.2 7.1 24.5
Related to acquisition of AEIM 1.0 2.0 -
======================================================= ============= ============= =========
Total share-based payments expense 10.2 9.1 24.5
======================================================= ============= ============= =========
The total expense recognised for the period in respect of
equity-settled share-based payment transactions was GBP10.3
million
(H1 2014/15: GBP11.4 million; FY2014/15: GBP26.5 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
2015 2014 2015
Number of Number of Number of
options options options
=============================== ============ ============ ==========
At the beginning of the period 175,000 503,750 503,750
Exercised (125,000) (328,750) (328,750)
Forfeited - - -
=============================== ============ ============ ==========
At the end of the period 50,000 175,000 175,000
Options exercisable 50,000 175,000 175,000
=============================== ============ ============ ==========
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
2015 2014 2015
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 35,333,782 29,315,890 29,315,890
Granted 12,156,409 6,241,637 10,229,859
Vested (5,278,564) (3,511,268) (3,579,819)
Forfeited (1,927,123) (278,981) (632,148)
===================================== =============== =============== ===============
Outstanding at the end of the period 40,284,504 31,767,278 35,333,782
===================================== =============== =============== ===============
Cash-settled awards
At the beginning of the period 1,348,818 5,359,834 5,359,834
Granted 50,862 15,161 15,161
Vested (212,458) - (36,887)
Forfeited (482,928) - (3,989,290)
===================================== =============== =============== ===============
Outstanding at the end of the period 704,294 5,374,995 1,348,818
===================================== =============== =============== ===============
Total awards
At the beginning of the period 36,682,600 34,675,724 34,675,724
Granted 12,207,271 6,256,798 10,245,020
Vested (5,491,022) (3,511,268) (3,616,706)
Forfeited (2,410,051) (278,981) (4,621,438)
===================================== =============== =============== ===============
Outstanding at the end of the period 40,988,798 37,142,273 36,682,600
===================================== =============== =============== ===============
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 interim condensed consolidated balance sheet is
GBP0.6 million (H1 2014/15: GBP4.9 million; FY2014/15: GBP1.3
million) of which GBPnil (H1 2014/15: GBPnil; FY2014/15: 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
2015 2014 2015
GBPm GBPm GBPm
====================================== ============ ============ =========
Current tax
UK corporation tax on profits for
the period 13.2 21.3 37.6
Overseas corporation tax charge 0.8 2.7 4.9
Adjustments in respect of prior
periods - - (1.2)
====================================== ============ ============ =========
14.0 24.0 41.3
Deferred tax
Origination and reversal of temporary
differences 1.6 3.4 -
Tax expense for the period 15.6 27.4 41.3
====================================== ============ ============ =========
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Factors affecting tax charge for the period
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
================================================ ============ ============ =========
Profit before tax 62.7 110.7 181.3
================================================ ============ ============ =========
Profit on ordinary activities multiplied
by the blended UK tax rate of 20.0%
(H1 2014/15: 20.75%; FY2014/15:
20.75%) 12.5 23.0 37.6
Effects of:
Non-deductible expenses 3.4 3.9 8.0
Deduction in respect of vested shares/exercised
options (Part 12, Corporation
Tax Act 2009) (2.7) (1.6) (2.5)
Deferred tax arising from origination
and reversal of temporary differences 0.8 3.5 -
Different rate of taxes on overseas
profits (0.5) (0.3) -
Non-taxable income - (0.9) (2.0)
Tax relief on amortisation and impairment
of goodwill and intangibles (0.5) (0.5) (1.0)
Other items 2.6 0.3 2.4
Adjustments in respect of prior
periods - - (1.2)
================================================ ============ ============ =========
Tax expense for the period 15.6 27.4 41.3
================================================ ============ ============ =========
Non-deductible expenses mainly comprise the impact of
non-deductible IFRS 2 accounting charges with respect to
share-based compensation of GBP1.9 million (H1 2014/15:
GBP1.7million; FY2014/15: GBP5.0 million). In addition, a deferred
tax charge of GBP1.6 million arose in the period (H1 2014/15:
GBP3.4 million charge; FY2014/15: GBPnil), relating mainly to the
reduction of the deferred tax asset on unvested share awards to UK
employees.
Finance (No. 2) Act 2015 sets the main rate of corporation tax
for the 2017, 2018 and 2019 fiscal years at 19% and for 2020 at
18%. For the purposes of the interim condensed consolidated
financial statements, the impact of these rate changes is
immaterial.
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 calculated based on basic earnings
per share adjusted for all dilutive potential ordinary shares.
There is no difference between the profit for the year attributable
to equity holders of the parent used in the basic and diluted
earnings per share calculations.
The 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
2015 2014 2015
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 673,307,875 674,687,014 674,424,923
Effect of dilutive potential ordinary
shares - share options/awards 37,857,715 30,674,382 31,986,209
====================================== ============ ============ ============
Weighted average number of ordinary
shares used in the calculation
of diluted earnings per share 711,165,590 705,361,396 706,411,132
====================================== ============ ============ ============
11) Dividends
Dividends paid
6 months 6 months
to to 12 months
31 December 31 December to 30 June
2015 2014 2015
GBPm GBPm GBPm
================================================= ============ ============ ===========
Final dividend for FY2014/15: 12.10p (FY2013/14:
12.00p) 84.5 82.7 82.7
Interim dividend for FY2014/15: 4.55p - - 31.3
================================================= ============ ============ ===========
84.5 82.7 114.0
================================================= ============ ============ ===========
In addition, the Group paid GBP2.5 million (H1 2014/15: GBP2.6
million; FY2014/15: GBP6.1 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
2015 2014 2015
Company pence pence pence
==================================== ============ ============ =========
Interim dividend declared per share 4.55 4.55 4.55
Final dividend proposed per share - - 12.10
==================================== ============ ============ =========
4.55 4.55 16.65
==================================== ============ ============ =========
The Board has approved an interim dividend for the six months to
31 December 2015 of 4.55 pence per share (six months
to 31 December 2014: 4.55 pence per share; final dividend for
the year to 30 June 2015: 12.10 pence per share) payable on 1 April
2016 to shareholders on the register on 4 March 2016.
12) Goodwill and intangible assets
Fund management
Goodwill relationships Total
GBPm GBPm GBPm
================================================== ======== =============== =======
Cost
================================================== ======== =============== =======
At 31 December 2015, 31 December 2014 and 30 June
2015 57.5 39.5 97.0
================================================== ======== =============== =======
Accumulated amortisation and impairment
================================================== ======== =============== =======
At 30 June 2014 - (23.2) (23.2)
Amortisation charge for the period - (1.7) (1.7)
Impairment charge for the period - - -
================================================== ======== =============== =======
At 31 December 2014 - (24.9) (24.9)
Amortisation charge for the period - (1.9) (1.9)
Impairment charge for the period - (0.4) (0.4)
================================================== ======== =============== =======
At 30 June 2015 - (27.2) (27.2)
Amortisation charge for the period - (1.9) (1.9)
Impairment charge for the period - - -
================================================== ======== =============== =======
At 31 December 2015 - (29.1) (29.1)
================================================== ======== =============== =======
Net book value
================================================== ======== =============== =======
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
Accumulated amortisation and impairment movement
for the period - (2.3) (2.3)
FX revaluation through reserves* (0.5) 0.1 (0.4)
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================================================== ======== =============== =======
At 30 June 2015 60.0 14.1 74.1
Accumulated amortisation and impairment movement
for the period - (1.9) (1.9)
FX revaluation through reserves* 3.6 0.8 4.4
================================================== ======== =============== =======
At 31 December 2015 63.6 13.0 76.6
================================================== ======== =============== =======
* 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 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 report and accounts for the year ended 30
June 2015.
During the period to 31 December 2015, no factors indicating
potential impairment of goodwill were noted.
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 2015: 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 2015, there was a review
process to identify factors indicating whether the Group's fund
management relationships were impaired. None was identified and as
a consequence there was no impairment charge included within the
Group's other expenses in the consolidated statement of
comprehensive income in the period (H1 2014/15: GBPnil; FY2014/15:
GBP0.4 million impairment charge was recognised).
The remaining amortisation period for fund management
relationships is three and a half years (31 December 2014: four and
a half years; 30 June 2015: four 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
2015.
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. It regularly reviews significant inputs and valuation
adjustments. If third-party information is used to measure fair
value, then the team assesses and documents the evidence obtained
from the third parties to support such valuations. There are no
material differences between the carrying amounts of financial
assets and liabilities and their fair values at the balance sheet
date.
Fair value hierarchy
The Group measures fair values using the following fair value
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
2015 2014 2015
============================ ========================== ==========================
Level Level Level Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total 1 2 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
======================= ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== ===== =====
Financial assets
Investment securities 29.6 53.9 57.0 140.5 139.8 55.1 - 194.9 36.8 46.7 47.5 131.0
Non-current
financial assets
held-for-sale - 22.5 - 22.5 - 57.6 - 57.6 - 31.7 - 31.7
Fair value through
profit or loss
investments - 67.0 - 67.0 - 16.8 - 16.8 - 61.8 - 61.8
Available-for-sale
financial assets 0.5 0.4 7.9 8.8 0.7 15.1 - 15.8 0.4 10.2 - 10.6
Non-current
asset investments - - 8.8 8.8 - 9.6 - 9.6 - 8.9 - 8.9
Derivative financial
instruments - - - - - 0.1 - 0.1 - 0.3 - 0.3
======================= ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== ===== =====
30.1 143.8 73.7 247.6 140.5 154.3 - 294.8 37.2 159.6 47.5 244.3
======================= ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== ===== =====
Financial liabilities
Third-party
interests in
consolidated
funds 12.3 22.4 23.8 58.5 76.5 30.2 - 106.7 15.0 8.7 17.8 41.5
Derivative financial
instruments - 1.3 - 1.3 - 4.0 - 4.0 - 0.3 - 0.3
Non-current
financial liabilities
held-for-sale - 5.9 - 5.9 - 26.8 - 26.8 - 11.0 - 11.0
12.3 29.6 23.8 65.7 76.5 61.0 - 137.5 15.0 20.0 17.8 52.8
======================= ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== ===== =====
Certain investments within non-current assets and
available-for-sale financial assets were transferred from Level 2
to Level 3 of the fair value hierarchy as at 31 December 2015.
There were no transfers between Level 1 and Level 2 of the fair
value hierarchy during the period (H1 2014/15: none; FY2014/15:
none).
Changes in Level 3 financial assets and liabilities recognised
at fair value on a recurring basis
Available-for-sale Non-current Third-party
financial asset investments interests
Investment assets GBPm in consolidated
securities GBPm funds
GBPm GBPm
============================================= =========== =================== =================== ================
At 1 January 2015 - - - -
Additions 47.6 - - 17.8
Losses recognised in consolidated
comprehensive
income within finance income (0.1) - - -
============================================= =========== =================== =================== ================
At 30 June 2015 47.5 - - 17.8
Additions 0.1 - 1.1 6.0
Transfers in from Level 2 2.2 7.9 9.4 -
Gains/(losses) recognised in consolidated
comprehensive income within finance
income/(expense) 7.2 - (1.7) -
At 31 December 2015 57.0 7.9 8.8 23.8
============================================= =========== =================== =================== ================
Valuation of Level 3 financial liabilities recognised at fair
value on a recurring basis
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The measurement of financial assets and third-party interests in
consolidated funds classified within Level 3 relates to investments
in closed-end private equity funds that are neither listed on any
stock exchange nor traded on any regulated markets. The Group
considers it is more appropriate to classify these investments
within Level 3 as the valuation is based on valuation techniques as
reflected within the net asset values (NAVs) of the funds as
provided by the administrator.
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 2015, 31 December 2014 and 30 June 2015.
14) Seed capital investments
The Group considers itself a sponsor of an investment fund when
it facilitates the establishment of the fund for which the Group is
the investment manager. The Group ordinarily provides seed capital
in order to provide initial scale and facilitate marketing of the
fund to third-party investors. The fund is then financed through
the issue of units to investors. Aggregate interests held by the
Group include seed capital, management fees and performance fees.
The Group generates management and performance fee income from
managing the assets on behalf of third-party investors.
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
2014/15: three; FY2014/15: eight) 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 2015 were as follows:
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
===================================================== =========== =========== =======
Non-current financial assets held-for-sale 22.5 57.6 31.7
Non-current financial liabilities held-for-sale (5.9) (26.8) (11.0)
===================================================== =========== =========== =======
Seed capital investments classified as held-for-sale 16.6 30.8 20.7
===================================================== =========== =========== =======
Investments 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 financial assets designated as
FVTPL. During the period, no funds (H1 2014/15: none; FY2014/15:
two) were transferred to FVTPL category.
If the fund remains under the control of the Group for more than
one year from the original investment date it will cease to be
classified as held-for-sale, and will be consolidated line-by-line
after it is assessed that the Group controls the investment fund in
accordance with the requirements of IFRS 10. During the period, two
such funds (H1 2014/15: five; FY2014/15: six) with an aggregate
carrying amount of GBP7.7 million (H1 2014/15: GBP16.2 million;
FY2014/15: GBP22.8 million) were transferred to consolidated funds.
There was no impact on net assets or total comprehensive income as
a result of the transfer.
Included within finance expense are net losses of GBP0.2 million
(H1 2014/15: net gains of GBP1.8 million; FY2014/15: net gains of
GBP2.1 million) in relation to held-for-sale investments (refer to
note 7).
As the Group considers itself to have one business segment
(refer to note 4), no additional segmental disclosure of
held-for-sale assets or liabilities is applicable.
b) Available-for-sale financial assets
Available-for-sale financial assets held at fair value at 31
December 2015 comprise equities held as follows:
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
============================================== =========== =========== =======
Equities listed on stock exchange 0.5 0.7 0.4
Equity funds 8.3 13.0 7.9
Debt funds - 2.1 2.3
============================================== =========== =========== =======
Seed capital classified as available-for-sale 8.8 15.8 10.6
============================================== =========== =========== =======
c) Fair value through profit or loss investments
Fair value through profit or loss investments at 31 December
2015 comprise equities held in equity funds.
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
===================================================== =========== =========== =======
Seed capital classified as fair value through profit
or loss investments 67.0 16.8 61.8
===================================================== =========== =========== =======
Included within finance expense are net gains of GBP0.2 million
(H1 2014/15: net gains of GBP1.6 million; FY2014/15: net losses of
GBP2.7 million) on the Group's fair value through profit or loss
investments.
d) Consolidated funds
The Group has consolidated 12 investment funds as at 31 December
2015 (31 December 2014: 14 investments funds; 30 June 2015: 12
investment funds), over which the Group is deemed to have control.
Consolidated funds represent seed capital investments where the
Group has held its position for a period greater than one year and
its interest represents a controlling stake in the fund in
accordance with IFRS 10. Consolidated fund assets and liabilities
are presented line by line after intercompany eliminations. The
table below sets out an analysis of the carrying amounts of
interests held by the Group in consolidated investment funds.
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
============================================ =========== =========== =======
Investment securities 140.5 194.9 131.0
Cash and cash equivalents 11.8 12.1 15.7
Other 0.2 (2.9) (0.2)
Third-party interests in consolidated funds (58.5) (106.7) (41.5)
============================================ =========== =========== =======
Consolidated seed capital investments 94.0 97.4 105.0
============================================ =========== =========== =======
Investment securities include listed and unlisted equities and
debt securities. Other includes trade receivables, trade payables,
derivative financial instruments and accruals.
The maximum exposure to loss is the carrying amount of the
assets held. The Group has not provided financial support or
otherwise agreed to be responsible for supporting any consolidated
fund financially.
Included within the interim condensed consolidated statement of
comprehensive income are net losses of GBP3.9 million (H1 2014/15:
net losses of GBP2.4 million; FY2014/15: net losses of GBP0.2
million) relating to the Group's share of the results of the
individual statements of comprehensive income for each of the
consolidated funds, as follows:
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
====================================================== =========== =========== =======
Finance income 10.4 2.3 5.3
Losses on investment securities (19.5) (5.2) (3.6)
Change in third-party interests in consolidated funds 7.0 1.7 0.8
Other expenses (1.8) (1.2) (2.7)
====================================================== =========== =========== =======
Net gains/(losses) on consolidated funds (3.9) (2.4) (0.2)
====================================================== =========== =========== =======
As of 31 December 2015, the Group's consolidated funds were
domiciled in Indonesia, Luxembourg and the United States.
e) Non-current asset investments
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Non-current asset investments relate to the Group's holding in
closed-end funds and are designated as FVTPL. Fair value is
assessed by taking account of the extent to which potential
dilution of gains or losses may arise as a result of additional
investors subscribing to the fund where the final close of a fund
has not occurred.
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
============================================ =========== =========== =======
Non-current asset investments at fair value 8.8 9.6 8.9
============================================ =========== =========== =======
Included within finance expense are net losses of GBP1.7 million
(H1 2014/15: net losses of GBP2.1 million; FY2014/15: net losses of
GBP2.9 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 Risk management section of the Group's annual report for the
year ended 30 June 2015, which provides further detail on the
Group's exposure to and the management of risks derived from the
financial instruments it uses. Those risks and the risk management
policies have not changed significantly during the six months to 31
December 2015.
16) Share capital
Authorised share capital
Number of Nominal value
shares GBP'000
=========================================================== =========== =============
Ordinary shares of 0.01p each at 31 December 2015, 30 June
2015 and 31 December 2014 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 2015 31 December 2014 30 June 2015
2015 Nominal 2014 Nominal 2015 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 2015, there were 50,000 options (31 December
2014: 175,000 options; 30 June 2015: 175,000 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 39,910,745 shares (31 December
2014: 31,767,278 shares; 30 June 2015: 35,333,782 shares) that have
release dates ranging from September 2016 to December 2020.
17) Own shares
The Ashmore 2004 Employee Benefit Trust (EBT) acts as an agent
to acquire and hold shares in Ashmore Group plc with a view to
facilitating the recruitment and motivation of employees. As at 31
December 2015, the EBT owned 38,108,258 (31 December 2014:
37,796,518; 30 June 2015: 37,889,347) ordinary shares of 0.01p with
a nominal value of GBP3,811 (31 December 2014: GBP3,780; 30 June
2015: GBP3,789) and shareholders' funds are reduced by GBP115.4
million (31 December 2014: GBP124.9 million; 30 June 2015: GBP125.3
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
2015 2014 2015
GBPm GBPm GBPm
=================================== ============= ============= =========
Short-term employee benefits 0.1 0.1 1.4
Defined contribution pension costs - - -
Share-based payment benefits - - 2.9
=================================== ============= ============= =========
0.1 0.1 4.3
=================================== ============= ============= =========
Share-based payment benefits represent the fair value charge to
the interim condensed consolidated statement of comprehensive
income of share awards.
During the period, there were no other transactions entered into
with key management personnel (H1 2014/15 and FY2014/15: none).
Aggregate key management personnel interests in consolidated funds
at 31 December 2015 was GBP16.4 million (31 December 2014: GBP8.4
million; 30 June 2015: GBP11.5 million).
Transactions with Ashmore Funds
During the period, the Group received GBP50.9 million of gross
management fees and performance fees (H1 2014/15: GBP66.1 million;
FY2014/15: GBP137.7 million) from the 85 funds (H1 2014/15: 83
funds; FY2014/15: 96 funds) it manages and which are classified as
related parties. As at 31 December 2015, the Group had receivables
due from funds of GBP23.1 million (31 December 2014: GBP61.2
million; 30 June 2015: GBP46.8 million).
Transactions with the EBT
The EBT has been provided with a loan facility to allow it to
acquire Ashmore shares in order to satisfy outstanding unvested
share awards. The EBT is included within the results of the Group.
As at 31 December 2015, the loan outstanding was GBP115.4 million
(31 December 2014: GBP148.6 million; 30 June 2015: GBP149.0
million).
Transactions with the Ashmore Foundation
The Ashmore Foundation is a related party to the Group. The
Foundation was set up to provide financial grants to worthwhile
causes within the Emerging Markets countries in which Ashmore
invests and/or operates with a view to giving back into the
countries and communities. The Group made donations of GBP59,000 to
the Foundation during the period (H1 2014/15: GBP25,000; FY2014/15:
GBP60,749).
19) Commitments
Undrawn investment commitments
As at As at As at
31 December 31 December 30 June
2015 2014 2015
GBPm GBPm GBPm
===================================================== ============ ============ ========
AA Development Capital India Fund 1 LLC 1.1 1.0 1.0
Ashmore Emerging Markets Distressed Debt Fund - - 1.4
Ashmore Emerging Markets Corporate Private Debt Fund 1.2 - 1.2
Ashmore I - CAF Colombian Infrastructure Senior Debt
Fund 13.7 - -
Ashmore I - FCP Colombia Infrastructure Fund 1.4 2.9 2.3
Ashmore Special Opportunities Fund LP 3.8 15.4 6.9
Everbright Ashmore China Real Estate Fund 1.3 1.6 1.3
KCH Healthcare LLC 5.1 - -
VTBC-Ashmore Real Estate Partners I, LP 3.0 3.4 2.9
Total undrawn investment commitments 30.6 24.3 17.0
===================================================== ============ ============ ========
20) Post-balance sheet events
There are no post-balance sheet events that require adjustment
or disclosure in these interim condensed consolidated financial
statements.
21) Accounting estimates and judgements
In preparing these interim condensed consolidated financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were substantially the same as those that
applied to the annual report and accounts as at and for the year
ended 30 June 2015.
Cautionary statement regarding forward looking statements
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