TIDMASHM
RNS Number : 5344O
Ashmore Group PLC
10 February 2021
Ashmore Group plc
10 February 2021
RESULTS FOR THE SIX MONTHSING 31 DECEMBER 2020
Ashmore Group plc (Ashmore, the Group), the specialist Emerging
Markets asset manager, today announces its unaudited results for
the six months ending 31 December 2020.
- Assets under management (AuM) increased 11% to US$93.0
billion
- Strong investment performance of US$10.8 billion
- Improving net outflows of US$1.4 billion
- Net inflows from institutional clients, outflows driven by
intermediary retail redemptions
- Significant outperformance across fixed income and
equities
- 97% of AuM outperforming benchmarks over the six months
- 50% of AuM outperforming benchmarks over one year, 39% over
three years and 91% over five years
- Typical recovery cycle in progress, potential for further
outperformance
- Strong profit growth driven by investment performance
- Profit before tax increased 14% to GBP150.6 million
- Strong performance and realisations in alternatives theme
generated performance fees of GBP7.7 million and GBP49.3 million
seed capital gain
- Average AuM 6% lower YoY, adjusted net revenue declined by 12%
YoY to GBP156.8 million
- Disciplined cost control delivered 6% reduction in non-VC
operating costs, maintained high adjusted EBITDA margin at 68%
- Adjusted EBITDA declined by 12% YoY, in line with adjusted net
revenue, to GBP107.2 million
- Diluted EPS increased 15% to 18.2 pence, interim DPS
maintained at 4.80 pence
- Continued strategic progress delivering diversification
- Equities AuM grew 41% over the period to US$6.5 billion
through strong performance and continued net inflows
- Investment grade universe continues to grow and strategies
performing well, attracting institutional flows
- Building track records in dedicated equities and fixed income
ESG funds
- Local asset management platforms growing rapidly, AuM growth
of 39% over the six months to US$6.9 billion
- Diversity, US dollar weakness, growth premium and relative
valuations support a positive Emerging Markets outlook
Commenting on the Group's results, Mark Coombs, Chief Executive
Officer, Ashmore Group said:
"Ashmore's performance in this period reflects the early stages
of a typical recovery cycle, with strong investment performance
driving AuM growth and delivering mark-to-market gains on the
firm's seed capital investments. Given the recovery in average AuM
and revenues naturally occurs with a lag, Ashmore has continued to
focus on managing operating costs and has therefore maintained the
Group's operating profitability at a high level. The firm has also
continued to make progress against its strategic objectives by
diversifying its investment capabilities and growing the scale of
its local asset management platforms.
"The delivery of vaccination programmes around the world will be
critical to the ongoing economic recovery in 2021, and in the
meantime government and central bank stimulus provide near term
support but will lead to a weaker US dollar over time. As the
short-term effect of this stimulus wears off, investors will seek
higher growth and returns than are available in the Developed
Markets, and will continue the trend of increasing allocations to
the Emerging Markets, which offer superior growth and attractive
valuations."
Analysts briefing
There will be an online presentation for analysts at 10.30am on
10 February 2021. A copy of the presentation will be made available
on the Group's website at www.ashmoregroup.com.
Contacts
For further information please contact:
Ashmore Group plc
Tom Shippey, Group Finance
Director +44 (0)20 3077 6191
Paul Measday, Investor
Relations +44 (0)20 3077 6278
FTI Consulting
Neil Doyle +44 (0)20 3727 1141
Laura Ewart +44 (0)20 3727 1160
Chief Executive Officer's report
Ashmore delivered strong AuM growth of +11% over the six months,
primarily through investment performance as would be expected at
this relatively early stage in a recovery cycle and following the
severe drop in markets earlier in 2020. The backdrop of rising
asset values and Ashmore's substantial alpha generation over the
six months meant that profit before tax increased by 14%, driven by
significant mark-to-market gains on the Group's seed capital
investments.
Ashmore's operating performance reflects 6% lower average AuM
compared with the prior year period, and consequently adjusted net
revenue declined by 12% and adjusted EBIDTA was 12% lower. The
efficiency of the Group's operating platform and the ongoing focus
on cost control means that the adjusted EBITDA margin was
maintained at 68%.
Diluted EPS increased by 15%, while on an adjusted basis,
excluding the effects of foreign exchange translation and seed
capital items, diluted EPS fell by 13% to 12.8 pence. Recognising
the strength of Ashmore's business model and the performance over
the period, the Board has maintained the interim dividend per share
of 4.80 pence.
Summary non-GAAP financial performance
The table below reclassifies items relating to seed capital and
the translation of non-Sterling balance sheet positions to aid
comprehension of the Group's operating performance. The exclusion
of these items also provides a more meaningful comparison with the
prior period. For the purposes of presenting 'Adjusted' profits,
personnel expenses have been adjusted for the variable compensation
on foreign exchange translation gains and losses.
Reclassification
of
===========================
Seed capital- Foreign
H1 2020/21 related exchange H1 2020/21 H1 2019/20
GBPm Statutory items translation Adjusted Adjusted
====================================== ========== ============= ============ ========== ==========
Net management fees 138.9 - - 138.9 168.3
Performance fees 7.7 - - 7.7 3.4
Other revenue 1.5 - - 1.5 2.5
Foreign exchange 2.6 - 6.1 8.7 3.1
-------------------------------------- ---------- ------------- ------------ ---------- ----------
Net revenue 150.7 - 6.1 156.8 177.3
Investment securities 55.9 (55.9) - - -
Third-party interests (25.7) 25.7 - - -
Personnel expenses (38.8) - (1.2) (40.0) (43.8)
Other expenses excluding depreciation
and amortisation (10.4) 0.8 - (9.6) (11.0)
====================================== ========== ============= ============ ========== ==========
EBITDA 131.7 (29.4) 4.9 107.2 122.5
EBITDA margin 87% - - 68% 69%
Depreciation and amortisation (1.6) - - (1.6) (1.7)
====================================== ========== ============= ============ ========== ==========
Operating profit 130.1 (29.4) 4.9 105.6 120.8
Net finance income/(expense) 20.4 (19.9) - 0.5 3.7
Associates and joint ventures 0.1 - - 0.1 (0.1)
====================================== ========== ============= ============ ========== ==========
Adjusted profit before tax 150.6 (49.3) 4.9 106.2 124.4
Foreign exchange translation - - (4.9) (4.9) (0.4)
Seed capital-related items - 49.3 - 49.3 8.4
====================================== ========== ============= ============ ========== ==========
Profit before tax 150.6 - - 150.6 132.4
====================================== ========== ============= ============ ========== ==========
Investment themes
External debt Local currency Corporate debt Blended debt
============================ ============================= ===================== ======================
Invests in debt Invests in local Invests in debt Asset allocation
instruments currencies and local instruments across the external
issued by sovereigns currency-denominated issued by public debt, local currency
and instruments issued and private and corporate debt
quasi-sovereigns by sector companies. investment themes,
and denominated sovereigns, quasi-sovereigns measured against
in foreign currencies. and companies. tailor-made blended
indices.
============================ ============================= ===================== ======================
Equities Alternatives Multi-asset Overlay/liquidity
============================ ============================= ===================== ======================
Invests in equity Invests in private Asset allocation Manages liquidity
and equity-related equity, healthcare, across the full and/or currency
instruments including infrastructure, debt and equity risk of an underlying
global, regional, special situations, investment universe. asset class.
country, small cap distressed
and frontier opportunities. debt and real estate
opportunities.
============================ ============================= ===================== ======================
Ashmore's eight headline investment themes provide access to the
broad range of investable and scalable investment opportunities
available across the diverse Emerging Markets universe. Three
factors will drive longer-term growth in the Group's AuM. First,
the Emerging Markets will continue to develop and evolve, with
broader, deeper and more accessible capital markets contributing to
the range and scale of investment opportunities; second, investor
allocations to Emerging Markets will increase from very underweight
levels currently; and third, Ashmore will continue to innovate in
order to provide access to new Emerging Markets investment
strategies.
Market review
Emerging Markets asset prices appreciated strongly over the past
six months, continuing the recovery from the initial COVID-19
crisis in the first quarter of 2020. This was driven by a sharp
bounce in economic activity in Q3, continued loose monetary policy
by central banks in the main Developed and Emerging Markets, and
the market reaction to the US election result. Notwithstanding the
strong performance of markets recently, the absolute and relative
valuations available across the Emerging Markets remain highly
attractive and provide for further performance.
Developed nations' policy responses to COVID-19, including
debt-funded fiscal expansion and a return to unconventional
monetary policy, will have consequences including lower interest
rates for a longer period of time and constraints on economic
growth brought about by increased public debt. In the short term,
the US dollar has weakened significantly because of the
deterioration in the US current account and fiscal deficits and the
continued weak productivity trend.
In aggregate, the emerging world is in a stronger position with
respect to economic growth, but across more than 70 countries there
will be a range of social, political and economic factors that
determine the impact of and response to the COVID-19 pandemic. For
example, parts of Asia were first to experience and to address the
virus impact and are leading the economic recovery, whereas Latin
America was later in the cycle but increasingly effective policy
support underpins its recovery.
There is a large set of countries that is well-represented
across the Emerging Markets and that fund themselves in their own
currency rather than rely on external creditors, and these
countries have significant policy flexibility to deal with the
worldwide growth shock and the domestic impact of the virus. In
contrast, externally funded countries will continue to rely heavily
on their creditors as they have fewer policy options available to
confront the twin growth and virus challenges. Against this broad
backdrop, the task for an active manager is to make investment
decisions based on valuations and not simply to categorise
countries as 'good' or 'bad'.
Subject to the evolution of the COVID-19 pandemic, the overall
picture therefore supports continued superior growth by emerging
countries and attractive valuations provide a strong incentive for
investors to continue allocating away from Developed Markets and to
the higher growth and higher return Emerging Markets.
External debt
The external debt asset class has attractive characteristics
that support its long-term outperformance versus Developed Markets,
particularly given the backdrop of increasingly low US interest
rates. The EMBI GD index is highly diversified and comprises 74
countries, with 54% of bonds rated investment grade, and offers a
spread over US Treasury bonds of 350 basis points, an attractive
level when compared with less than 300 basis points a year ago and
the historical low of below 200 basis points.
Over the six months to 31 December 2020, the index returned
+8.2% with high yield (HY) bonds outperforming investment grade
(IG) assets (+11.5% compared with +5.6%, respectively). Ashmore's
broad external debt composite outperformed by 450 basis points over
this period with a return of +12.7%.
Investment performance over three years has benefited from the
substantial returns delivered since April 2020, but also reflects
the underperformance in the early part of 2020. The broad external
debt composite has delivered +3.4% on a gross annualised basis
compared with +5.1% for the benchmark index.
In addition to the attractive spreads available in external
debt, the technical backdrop is likely to be supportive over the
next 12 months with close to zero net issuance expected in the US
IG market, which should encourage cross-over investors to add
exposure to Emerging Markets bonds where further growth in markets,
including IG bonds, will provide investment opportunities.
Furthermore, there is approximately US$15 trillion of developed
world bonds trading with negative nominal yields, representing 35%
of the JP Morgan GBI-DM index. When considered in real terms, this
figure rises to US$37 trillion (89% of the index), therefore
providing a strong incentive for investors to allocate to Emerging
Markets to capture the attractive valuations and returns
available.
Local currency
Local currency bonds represent more than 80% of outstanding debt
issuance in emerging countries, or US$24.1 trillion in total, of
which US$11.6 trillion has been issued by governments and therefore
is approximately eight times the size of the sovereign external
debt market. Therefore this is a significant asset class, whose
growth is underpinned by the ongoing development of domestic
capital markets and the structural trend for countries to
transition from external funding to local financing.
Over the past six months, the GBI-EM GD index returned +10.3%,
making it the best-performing of the main Emerging Markets fixed
income asset classes. Around one-third of the performance was from
rates with the remainder delivered by currency appreciation against
the US dollar. Ashmore delivered 300 basis points of outperformance
over the six months, with a +13.3% return in its local currency
bonds composite.
An important development in the period was the completion of
China's inclusion in the benchmark GBI-EM GD index, at the maximum
weight of 10% and representing approximately US$200 billion of
market. This increases the diversity of the index and provides a
tangible opportunity for foreign investors to gain exposure to the
large, growing and attractively valued Chinese local government
bond market.
Ashmore's local currency bonds composite has outperformed over
the past three years with a gross annualised return of +3.2%
compared with the benchmark return of +3.0%.
Three factors underpin the near-term return potential in this
asset class:
- with low inflation across the major emerging economies, the
local currency bond index offers a real yield of over 2%, which
compares favourably with the -1.5% real yield for US
inflation-linked government bonds of similar duration;
- the structural challenges facing the US economy mean the US
dollar should continue to weaken, therefore benefiting local
currency returns in bonds and equities; and
- steep local yield curves mean that term yields can fall as the
Emerging Markets risk premium declines through improving economic
performance, currency strength and the easing of local financial
conditions.
Corporate debt
Over the six-month period, the benchmark CEMBI BD index
performed well and returned +7.3%. As was the case with external
debt, HY bonds outperformed IG bonds with returns of +10.0% and
+5.4%, respectively. Ashmore's broad corporate debt composite
outperformed, with a return of +12.8% over the period.
Also similar to external debt, the three-year performance track
record has been affected by the weaker performance earlier in 2020.
The broad corporate debt composite has returned +5.7% on a gross
annualised basis over three years compared with +6.0% for the
benchmark index.
While default rates have increased as a consequence of the
COVID-19 crisis, to 5.0% at the end of 2020, structural factors
such as diversification (58 countries) and asset quality (58% by
value of the index is IG-rated) mean that the asset class is more
favourably positioned than the US HY market, where the default rate
is currently 9.5%. As the economic recovery takes hold, and
corporate earnings improve (in both local currency and US dollar
terms), together with the support of an increase in commodity
prices, the outlook for Emerging Markets corporate debt returns is
positive.
Blended debt
The standard blended debt benchmark (50% EMBI GD, 25% GBI-EM GD
and 25% ELMI+ indices) returned +8.6% over the six months.
Ashmore's broad blended debt composite delivered +14.1% over the
six months and outperformed its benchmark by 550 basis points.
An allocation to blended debt offers investors a logical
starting point to obtain exposure to a wide range of Emerging
Markets fixed income asset classes, or alternatively allows the
more experienced Emerging Markets investor to define a bespoke
benchmark. Ashmore offers blended debt products in broad,
investment grade and dedicated ESG funds. The portfolios are
managed actively and investment processes can exploit the
significant (more than 450 bps) average difference in annual gross
returns between the best and worst performing underlying fixed
income asset classes.
Over the past three years, Ashmore's blended debt strategy has
returned +3.2% on a gross annualised basis versus +3.6% for its
benchmark index.
Equities
Emerging Markets equities delivered very strong investment
returns over the six months, with the MSCI EM index rising by
+31.1% and significantly outperforming developed world indices such
as the S&P 500 (+21.2%). Ashmore's Active and All Cap
strategies delivered strong outperformance over the six months,
with absolute returns of +33.6% and +39.2%, respectively. The
specialist Small Cap strategy also outperformed, with an absolute
return of +43.5% compared with +36.7% for the MSCI Small Cap
benchmark.
This performance reflects the twin tailwinds of the start of an
economic recovery, particularly in parts of Asia that encountered
the COVID-19 virus early, and stronger local currencies against the
US dollar.
An expectation of capital flows to emerging countries supports
the outlook for equities. This creates a virtuous cycle in
financially constrained economies, by delivering currency
appreciation, economic expansion, corporate earnings growth and
asset price appreciation.
Furthermore, the MSCI EM currently trades at a substantial
long-term price/earnings discount to the S&P 500 index of
approximately 60%. Hence, both earnings expansion, with consensus
expectations for around 30% year-on-year growth in 2021, and the
potential for a relative re-rating versus developed world equity
markets, underpin the potential absolute and relative performance
of Emerging Markets equities.
Ashmore continues to deliver strong performance in its global
equity strategies. For example, on a gross annualised basis over
three years, the Active strategy has returned +8.6% and the All Cap
strategy has delivered +13.3%, compared with +6.2% for the MSCI EM
benchmark index, and the Small Cap strategy has returned +10.3%
compared with +2.7% for the MSCI Small Cap benchmark index.
Market outlook
The end of 2020 and the start of 2021 has seen further waves of
COVID-19 impact countries around the world. However, progress has
been made in developing and deploying vaccines, such that
expectations of progress towards more normal levels of mobility and
economic activity in 2021 remain intact. Compared with developed
countries, the emerging nations experienced a shallower recession
in 2020 and are forecast to rebound at a faster pace in 2021; for
example the IMF predicts Emerging Markets will report a 3.3% fall
in GDP in 2020 followed by 6.0% expansion in 2021, compared with a
5.8% decline and a 3.9% recovery for Developed Markets. The main
risk to this forecast is a different path for COVID-19, but this is
a worldwide pandemic and so that risk will be faced by both
emerging and developed countries.
The global macro outlook is underpinned by continued
expansionary fiscal and monetary policies by developed countries.
However, this will also result in record debt/GDP levels in those
countries, which undermine longer-term growth. In the case of the
US, the fiscal deficit and current account deficit together
represent 18% of GDP, another record level, and one that points to
further currency weakness.
This backdrop therefore favours Emerging Markets, since a weaker
US dollar will cause capital to flow from the US economy in search
of higher returns elsewhere. The highly attractive spreads, real
yields and equity valuations available across a broad range of
Emerging Markets will attract flows, which in turn drives economic
growth and currency appreciation, and leads to further capital
inflows. Indeed, after the market volatility of 2020, the
prevailing valuation differentials between Emerging Markets and
Developed Markets suggest meaningful outperformance by the former
over the medium term, which should cause investors to continue
raising allocations to those parts of the world that offer higher
growth and higher yields.
Business and strategic developments
Ashmore's distinctive culture, strong and liquid balance sheet,
and ongoing focus on cost control mean that its business model has
managed the operational impact of the COVID-19 pandemic
effectively, even though for some offices the remote-working
environment has persisted.
Employees in several of the Group's businesses have begun to
return to their offices as local guidance allows, notably in
Colombia, Japan, Saudi Arabia, Singapore and the United Arab
Emirates. However, government guidance in Indonesia, Ireland, the
United Kingdom and the United States means that employees in those
countries continue to work remotely, supported by Ashmore's robust
operating infrastructure. Ashmore's culture is centred on teams
collaborating in offices, but the transition back to this way of
working will be made only when it is safe and appropriate to do so,
and in accordance with local government advice for each office.
Notwithstanding the challenges and opportunities presented by a
market cycle, Ashmore has continued to make progress against its
strategic objectives, in particular through diversifying the firm's
investment capabilities and by growing the scale of its local asset
management platforms.
Diversifying investment themes
Ashmore's strategy is to develop a broad-based Emerging Markets
franchise that is not reliant on any single investment theme,
client type or geography. Diversification continued in this period,
as illustrated by the momentum in the equities business, clients
recognising the attractions of investment grade bonds, and the
development of dedicated ESG investment track records in equities
and fixed income.
Equities
Equities AuM increased 41% over the six months through net
inflows of +US$0.3 billion and investment performance of +US$1.6
billion. The All Cap strategy achieved the important three-year
investment track record milestone at the end of the period, with
gross annualised returns of +13.3% compared with +6.2% for the MSCI
EM benchmark. This means Ashmore now has a broad set of global
Emerging Markets equities products, including Active, All Cap and
Small Cap strategies, with strong investment track records to
complement its regional, thematic and single-country funds and,
after six consecutive quarters of net inflows to the equities
theme, this augurs well for further capital raising.
Investment grade credit
Over time, increasing numbers of Emerging Markets countries and
companies have achieved investment grade status such that IG-rated
bonds now account for more than half of the external debt and
corporate debt indices (54% and 59%, respectively). While economic
cycles will inevitably cause some volatility in ratings, the
long-term trend is for more IG issuance in Emerging Markets. In
addition to the increasing scale of the investment opportunity,
investor demand is also rising, as institutions recognise the
attractive characteristics of the IG asset class, such as lower
volatility during periods of risk aversion, stronger macroeconomic
fundamentals, higher yields than developed world bonds, increasing
diversification, no defaults, and good risk-adjusted returns.
Ashmore's fixed income products include investment grade
strategies in all four investment themes (external debt, local
currency, corporate debt and blended debt), and the Group manages
IG portfolios in both mutual fund and segregated account
structures. Over the past six months, there has been meaningful
demand, from both existing and new clients, for investment grade
strategies and Ashmore's strong investment performance in its IG
products underpins the potential for further capital raising.
Sustainability
Ashmore has developed a comprehensive approach to
sustainability, both as a listed asset management group and through
its investing activities in emerging countries.
From an investment management perspective, it is expected that
client demand will fall into two broad areas. First, those clients
that want dedicated ESG products and may be willing to sacrifice
financial returns in order to ensure that portfolios adhere to
prescribed minimum criteria for E, S and G factors; and second,
those clients that want broader portfolios but with investment
performance that is delivered with a purpose. It is currently the
view that client demand is likely to be biased towards the latter
approach, however Ashmore has ESG factors embedded in its equity,
fixed income and certain alternatives investment processes and so
is well positioned to cater to both views.
Ashmore has four dedicated ESG funds in the external debt,
corporate debt, blended debt and equity themes. While investment
track records are still developing, the funds have delivered
positive returns and outperformance since inception.
In support of its sustainability activities, Ashmore is a
signatory to initiatives such as the UNPRI and the UN Global
Compact.
Finally, Ashmore's charitable foundation provides a third pillar
to the Group's sustainability approach alongside the listed company
and investment management activities. This integrated approach
delivers practical benefits, such as the grants made by the
Foundation both to offset the Group's operational carbon emissions
and to deliver positive outcomes for society.
Mobilising Emerging Markets capital
Ashmore's network of local asset management businesses is
growing strongly, with AuM increasing by 39% over the six-month
period and 19% over the past 12 months to US$6.9 billion, or 7% of
Group AuM. There was particularly strong growth in India and
Indonesia, with the latter now managing close to US$3 billion and
growing 20% in the year following its listing in January 2020. As
the franchises grow AuM on scalable operating platforms, operating
margins are increasing and trending towards the Group's level.
The contribution of the local businesses to the Group's growth
and profitability should continue to increase over the longer term
as each of the local management teams delivers on its strategic
objectives and participates in the development of the independent
asset management industry in its domestic market. This aspect of
the Group's strategy also increases diversification, providing
Ashmore with independent investment processes, uncorrelated
investment returns and different product structures and client
bases.
AuM development
As at 31 December 2020, assets under management were US$93.0
billion, an increase of US$9.4 billion or 11% during the six
months. Investment performance was the principal driver of the
increase, contributing US$10.8 billion and more than offsetting the
US$1.4 billion of net outflows in the period. This pattern of
growth, with market and relative investment performance driving
AuM, is typical for the initial recovery period immediately
following a fall in markets such as that experienced in early 2020.
Indeed a similar growth profile was seen in 2016 (following the
2013-2015 Emerging Markets cycle) and 2009 (after the immediate
market impact of the financial crisis).
Average AuM of US$87.7 billion was 6% lower than in the same
period in the prior year (H1 2019/20: US$93.3 billion).
Gross subscriptions of US$7.5 billion represent 9% of opening
AuM (H1 2019/20: US$14.9 billion, 16% of opening AuM), lower than
in the prior year period as activity levels reduced following the
initial impact of the COVID-19 pandemic on markets. Client demand
was diversified across investment themes and there was a mix of new
and existing client flows. New mandates in the equities, external
debt and blended debt themes represent approximately 15% of
institutional gross subscriptions, and illustrate that the Group's
distribution model has continued to operate successfully in the
remote-working environment that persists in many locations. Flows
into existing large institutional mandates were notable in the
overlay / liquidity, external debt, corporate debt and blended debt
themes, and there was meaningful demand for investment grade
strategies in the external debt theme.
Gross redemptions of US$8.9 billion, or 11% of opening AuM, were
similar in quantum to the prior year period (H1 2019/20: US$9.2
billion, 10% of opening AuM). The mix of redemptions by client type
was also consistent, with intermediary retail clients, that
typically exhibit higher churn rates through market cycles,
accounting for 36% of the gross redemptions (H1 2019/20: 40%) while
representing 9% of the Group's AuM as at 31 December 2020. The
redemptions reflect asset allocation decisions, particularly by
institutions in the blended debt theme and intermediaries in the
local currency theme, as well as continued outflows from mutual
funds in the local currency and corporate debt themes.
Included in the gross redemptions figure is approximately US$0.2
billion that was returned to investors following successful
realisations in the alternatives theme.
On a net basis, flows for the period comprise a net inflow from
institutional clients of GBP0.6 billion and net redemptions by
intermediary retail clients of GBP2.0 billion.
As described in the Financial review below, the mix of gross and
net flows in the period by reference to client type, mandate size
and investment strategy, had an overall dilutive impact on the
Group's average net management fee margin.
The Group's client base continues to be predominantly
institutional, with 91% of AuM from such clients (30 June 2020:
89%) and the remainder sourced through intermediary retail
channels. Segregated accounts represent 76% of AuM (30 June 2020:
75%) and, consistent with the third phase of the Group's strategy,
26% of the Group's AuM has been sourced from clients domiciled in
Emerging Markets (30 June 2020: 26%).
Ashmore's principal mutual fund platforms are in Europe and the
US, and total AuM across the two platforms was flat in the period
with market performance offsetting net outflows. The European SICAV
range comprises 28 funds with AuM of US$12.1 billion (30 June 2020:
US$12.1 billion in 30 funds) and the US 40-Act range has 11 funds
with AuM of US$2.3 billion (30 June 2020: US$2.4 billion in 10
funds).
The Group's investments are geographically diverse and broadly
consistent with recent periods, with 38% of AuM invested in Latin
America, 24% in Asia Pacific, 21% in Eastern Europe and 17% in the
Middle East and Africa.
Investment performance
As at 31 December 2020, 50% of AuM is outperforming over one
year, 39% over three years and 91% over five years (30 June 2020:
9%, 17% and 74%, respectively). The consistent implementation of
the active investment processes through the cycle has delivered
strong outperformance in the initial recovery period immediately
following the severe market environment of early 2020, with 97% of
AuM outperforming benchmarks over the six months to 31 December
2020.
The strength of the recovery thus far is illustrated by the
absolute and relative performance of a broad range of Ashmore
investment composites over the past nine months, such as broad
external debt (+30.6% absolute, +9.1% outperformance), local
currency bonds (+25.8% absolute, +4.7% outperformance), broad
corporate debt (+29.3% absolute, +10.1% outperformance), blended
debt (+31.2% absolute, +12.4% outperformance), EM All Cap equities
(+77.4% absolute, +22.5% outperformance) and EM Small Cap equities
(+102.7% absolute, +28.9% outperformance).
Current valuation levels support the potential for further
market recovery, and provide a firm basis for Ashmore to continue
to deliver absolute and relative performance for clients.
AuM movements by investment theme as classified by mandate
The development during the period of AuM by theme as classified
by mandate is shown in the following table.
AuM AuM
30 June Gross Gross 31 December
2020 subscriptions redemptions Net flows Performance 2020
Investment theme US$bn US$bn US$bn US$bn US$bn US$bn
================== ======== ============== ============ ========= =========== ============
External debt 17.1 1.3 (1.0) 0.3 1.9 19.3
Local currency 18.7 1.5 (2.2) (0.7) 2.6 20.6
Corporate debt 10.6 1.0 (1.8) (0.8) 1.8 11.6
Blended debt 23.3 1.2 (2.8) (1.6) 3.0 24.7
Equities 4.6 0.8 (0.5) 0.3 1.6 6.5
Alternatives 1.4 0.1 (0.2) (0.1) - 1.3
Multi-asset 0.3 - - - - 0.3
Overlay/liquidity 7.6 1.6 (0.4) 1.2 (0.1) 8.7
================== ======== ============== ============ ========= =========== ============
Total 83.6 7.5 (8.9) (1.4) 10.8 93.0
================== ======== ============== ============ ========= =========== ============
Financial review
Revenues
Net revenue declined by 15% to GBP150.7 million as a result of
lower average AuM and consequently reduced net management fees. On
an adjusted basis, excluding foreign-exchange translation effects,
net revenue fell by 12% to GBP156.8 million.
Net revenue
H1 2020/21 H1 2019/20
GBPm GBPm
============================== =========== ==========
Net management fees 138.9 168.3
Performance fees 7.7 3.4
Other revenues 1.5 2.5
FX: hedges 8.7 3.1
============================== =========== ==========
Adjusted net revenue 156.8 177.3
FX: balance sheet translation (6.1) (0.5)
============================== =========== ==========
Net revenue 150.7 176.8
============================== =========== ==========
Management fee income, net of distribution costs, declined by
17% to GBP138.9 million, reflecting 6% lower average AuM, a
stronger GBP:USD rate compared with the prior year period, and a
fall in the average net management fee margin from 46bps to 42bps.
At constant H1 2019/20 exchange rates, net management fee income
reduced by 14%.
The movement in the net management fee margin is attributable to
the impact of net outflows from higher margin mutual funds in the
local currency and corporate debt themes (-1.5 basis points); the
effect of differences in the mix of AuM by investment theme (-1.0
basis point) including growth in overlay / liquidity AuM offset by
growth in higher margin equities AuM; and the impact of net flows
into large institutional mandates, by both new and existing clients
(-1.0 basis point). The remaining year-on-year difference of 0.5
basis point is the result of other factors including product mix
and competition.
Fee income and net management fee margin by investment theme
The table below summarises the net management fee income after
distribution costs, performance fee income, and average net
management fee margin by investment theme, determined by reference
to weighted average assets under management excluding non-fee
earning AuM and AuM for which the income is recognised elsewhere in
the financial statements, for example associates and joint
ventures.
Net management fee
Net management fees Performance fees margin
====================== ====================== ======================
H1 2020/21 H1 2019/20 H1 2020/21 H1 2019/20 H1 2020/21 H1 2019/20
Investment theme GBPm GBPm GBPm GBPm bps bps
================== ========== ========== ========== ========== ========== ==========
External debt 27.1 31.8 - 2.4 39 41
Local currency 26.5 31.6 - - 36 39
Corporate debt 18.1 29.9 4.2 0.1 43 52
Blended debt 42.6 49.1 0.2 0.9 47 49
Equities 12.1 12.4 - - 60 68
Alternatives 6.9 7.6 3.3 - 141 134
Multi-asset 1.2 1.7 - - 113 98
Overlay/liquidity 4.4 4.2 - - 15 16
================== ========== ========== ========== ========== ========== ==========
Total 138.9 168.3 7.7 3.4 42 46
================== ========== ========== ========== ========== ========== ==========
The movements in investment theme net management fee margins are
consistent with the trends for the Group overall. Notably, the
impact of growth in both existing and new large mandates affected
all fixed income themes and the equities theme; outflows from
higher margin mutual funds were experienced in the local currency
and corporate debt themes; and institutional demand for investment
grade mandates has been experienced in the external debt and
corporate debt themes.
Performance fees of GBP7.7 million (H1 2019/20: GBP3.4 million)
were generated in the six months. These were the result of strong
relative performance towards the end of the period enabling fees to
be realised from the performance of several large institutional
mandates, together with fees recognised on the successful
realisation of assets in the alternatives theme. The proportion of
the Group's AuM that is eligible to earn performance fees was
unchanged at 31 December 2020 at 13%, of which a substantial
proportion is subject to rebate agreements. The Group continues to
expect its diverse sources of net management fee income to generate
the substantial majority of its net revenues.
Translation of the Group's non-Sterling assets and liabilities,
excluding seed capital, resulted in an unrealised foreign exchange
loss of GBP6.1 million (H1 2019/20: GBP0.5 million loss) reflecting
a higher GBP:USD dollar rate at the period end. The Group's
effective hedging programme and the timing of foreign currency cash
flows during the period meant that realised and unrealised hedging
gains of GBP8.7 million were generated (H1 2019/20: GBP3.1 million
gain). Therefore, a total foreign exchange gain of GBP2.6 million
was recognised in revenues (H1 2019/20: GBP2.6 million gain).
Other revenue fell slightly to GBP1.5 million (H1 2019/20:
GBP2.5 million), with fewer transaction fees in the alternatives
theme.
Operating costs
Total operating costs of GBP50.8 million (H1 2019/20: GBP57.5
million) include GBP0.8 million of expenses incurred by seeded
funds that are required to be consolidated (H1 2019/20: GBP1.1
million), as disclosed in note 15. On an adjusted basis, taking
into account the impact of seed capital and the variable
compensation accrual on foreign exchange translation losses,
operating costs were reduced by 9% compared with the prior year
period. Adjusted operating costs also fell by 9% at constant H1
2019/20 exchange rates.
Operating costs
H1 2020/21 H1 2019/20
GBPm GBPm
======================= =========== ==========
Fixed staff costs (13.6) (13.6)
Other operating costs (9.6) (11.0)
Depreciation and
amortisation (1.6) (1.7)
======================= =========== ==========
Operating costs before
VC (24.8) (26.3)
Variable compensation
(VC) (25.2) (30.1)
VC accrual on FX
gains/losses (1.2) (0.1)
======================= =========== ==========
Adjusted operating
costs (51.2) (56.5)
Consolidated funds
costs (0.8) (1.1)
Add back VC on FX
gains/losses 1.2 0.1
======================= =========== ==========
Total operating costs (50.8) (57.5)
======================= =========== ==========
The Group's headcount of 309 was broadly stable over the six
months (30 June 2020: 306), and the average headcount of 308 was
unchanged compared with the prior year period. Consequently, the
Group's fixed staff costs of GBP13.6 million were also unchanged.
Ashmore has not furloughed or made redundant any employees as a
result of COVID-19 and nor has it voluntarily taken advantage of
any government or other support schemes in any of the countries in
which it operates.
Other operating costs, excluding consolidated fund expenses and
depreciation and amortisation, fell by GBP1.4 million, or 13%, to
GBP9.6 million. The reduction has been achieved primarily as a
consequence of the COVID-19 restrictions imposed in many of the
Group's operating locations, resulting in less travel and reduced
office-related expenses as the majority of the Group's employees
continue to work remotely.
As is usual at the half-year stage, variable compensation has
been accrued at 20% of earnings before variable compensation,
interest and tax, resulting in a charge of GBP25.2 million (H1
2019/20: GBP30.1 million).
The combined depreciation and amortisation charges for the
period were consistent with the prior year period at GBP1.6
million.
Adjusted EBITDA
Adjusted EBITDA fell by 12% from GBP122.5 million to GBP107.2
million, consistent with the 12% decline in adjusted net revenue
and resulting in an adjusted EBITDA margin of 68%.
Finance income
Net finance income of GBP20.4 million (H1 2019/20: GBP9.5
million) includes profits relating to seed capital investments,
which are described in more detail below. Excluding such profits,
net interest income for the period was GBP0.5 million (H1 2019/20:
GBP3.7 million), reflecting lower prevailing market interest
rates.
Profit before tax
Statutory profit before tax increased by 14% to GBP150.6 million
(H1 2019/20: GBP132.4 million) as a consequence of the strong
mark-to-market gains generated by the Group's seed capital
programme.
Taxation
The majority of the Group's profit is subject to UK taxation. Of
the total current tax charge for the six-month period of GBP18.7
million (H1 2018/20: GBP20.9 million), GBP7.9 million relates to UK
corporation tax (H1 2019/20: GBP11.8 million).
The Group's effective tax rate for the six-month period is 14.7%
(H1 2019/20: 13.7%), which is lower than the prevailing UK
corporation tax rate of 19.0% (H1 2019/20: 19.0%). This reflects
the impact of the Group's share price on the allowable value of
share-based remuneration provided to employees, the impact of
non-taxable unrealised seed capital gains and the geographic mix of
the Group's profits in the period. Note 9 to the interim condensed
financial statements provides a full reconciliation of this
difference compared to the UK corporation tax rate.
The Group's ongoing effective tax rate, based on its current
geographic mix of profits and prevailing tax rates, is expected to
be in the range 16% to 17%.
Earnings per share
Basic earnings per share for the period increased by 15% to 19.4
pence (H1 2019/20: 16.9 pence) and diluted earnings per share also
increased by 15% from 15.8 pence to 18.2 pence, reflecting the
higher gains delivered by seed capital investments.
On an adjusted basis, excluding the effects of foreign exchange
translation, seed capital-related items and relevant tax, diluted
earnings per share fell by 13% to 12.8 pence (H1 2019/20: 14.7
pence).
Balance sheet
Ashmore's approach is to maintain a strong balance sheet through
market cycles to support the commercial demands of current and
prospective investors, and to take advantage of strategic
development opportunities across the business.
As at 31 December 2020, total equity attributable to
shareholders of the parent was GBP824.8 million (31 December 2019:
GBP810.5 million, 30 June 2020: GBP856.4 million). Capital
resources available to the Group totalled GBP727.3 million as at 31
December 2020, equivalent to 102 pence per share, and significantly
exceeded the Group's Pillar II regulatory capital requirement of
GBP147.3 million, equivalent to 17 pence per share. The Group has
no debt.
Cash
Ashmore's business model continues to deliver a high conversion
rate of operating profits to cash. Based on operating profit of
GBP130.1 million for the period (H1 2019/20: GBP123.0 million), the
Group generated GBP88.9 million of cash from operations (H1
2019/20: GBP113.5 million). The operating cash flows after
excluding consolidated funds represent 83% of the adjusted EBITDA
for the period of GBP107.2 million (H1 2019/20: 94%).
Cash and cash equivalents by currency
31 December 30 June
2020 2020
GBPm GBPm
========== =========== =======
Sterling 73.8 66.0
US dollar 333.7 391.1
Other 41.2 43.8
========== =========== =======
Total 448.7 500.9
========== =========== =======
It is normal for the Group's cash balance to decline in the
first half of the financial year as the Group distributes the final
ordinary dividend to shareholders and pays cash variable
remuneration to employees, both of which relate to the prior
financial year.
Seed capital investments
The Group's actively managed seed capital programme has
delivered growth in third-party AuM with approximately US$9 billion
of AuM in funds that have been seeded, representing 10% of total
Group AuM.
During the six-month period, the Group made new investments of
GBP68.0 million and realised GBP79.9 million from previous
investments. The consequent net recycling of GBP11.9 million was
more than offset by the strong investment return of GBP28.1
million, meaning that the market value of the Group's seed capital
investments increased from GBP238.4 million as at 30 June 2020 to
GBP254.6 million as at 31 December 2020.
Ashmore has also made seed capital commitments to funds of
GBP10.1 million that were undrawn at the period end, giving a total
committed value for the Group's seed capital programme of
approximately GBP265 million.
As at 31 December 2020, the original cost of the Group's current
seed capital investments was GBP208.8 million, representing 28% of
Group net tangible equity. Approximately 75% of the Group's seed
capital is held in funds with better than one-month dealing
frequency, such as SICAV or US 40-Act mutual funds.
Significant new investments were made firstly to support
distribution efforts, both in Latin America and by adding scale to
existing SICAV funds in the equities theme, and secondly into
investment grade product in the corporate debt theme. Redemptions
reflect decent client flows into equity funds and successful
realisations and the subsequent return of capital by funds in the
alternatives theme.
Seed capital market value by currency
31 December 30 June
2020 2020
GBPm GBPm
=================== =========== =======
US dollar 218.3 213.7
Colombian peso 14.5 13.9
Other 21.8 10.8
=================== =========== =======
Total market value 254.6 238.4
=================== =========== =======
The table below summarises the principal IFRS line items to
assist in the understanding of the financial impact of the Group's
seed capital programme. The seed capital investments generated a
total gain of GBP49.3 million in the period of which GBP3.3 million
was realised (H1 2019/20: GBP8.4 million gain). This comprises a
GBP30.9 million gain in respect of consolidated funds, including
GBP1.5 million of finance income, and an GBP18.4 million gain in
respect of unconsolidated funds that is reported in finance
income.
Foreign exchange
The majority of the Group's fee income is received in US dollars
and it is the Group's policy to hedge up to two-thirds of the
notional value of budgeted foreign currency-denominated net
management fees, using either forward or option foreign exchange
contracts. Ashmore's Foreign Exchange Management Committee
determines the proportion of budgeted fee income to hedge or sell
by regular reference to expected non-US dollar, and principally
Sterling, cash requirements. Foreign currency assets and
liabilities, including cash, are marked to market at the period end
exchange rate with movements reported in either revenues or other
comprehensive income.
Financial impact of seed capital investments
H1 2020/21 H1 2019/20
GBPm GBPm
====================================================== ========== ==========
Consolidated funds (note 15):
Gains/(losses) on investment securities 55.9 4.2
Change in third-party interests in consolidated funds (25.7) (0.5)
Operating costs (0.8) (1.1)
Finance income 1.5 2.0
------------------------------------------------------ ---------- ----------
Sub-total: consolidated funds 30.9 4.6
Unconsolidated funds (note 7):
Market return 20.8 0.6
Foreign exchange (2.4) 3.2
------------------------------------------------------ ---------- ----------
Sub-total: unconsolidated funds 18.4 3.8
Total seed capital profit/(loss) 49.3 8.4
------------------------------------------------------ ---------- ----------
- realised 3.3 1.5
- unrealised 46.0 6.9
====================================================== ========== ==========
Goodwill and intangible assets
At 31 December 2020, goodwill and intangible assets on the
Group's balance sheet totalled GBP81.4 million (30 June 2020:
GBP89.7 million). The movement in the period is the result of an
amortisation charge of GBP0.1 million (H1 2019/20: GBP0.1 million)
and a foreign exchange revaluation loss in reserves of GBP8.2
million (H1 2019/20: GBP3.2 million loss).
Shares held by Employee Benefit Trust (EBT)
The Group's EBT purchases and holds shares in anticipation of
the vesting of share awards. At 31 December 2020, the EBT owned
52,430,131 ordinary shares (30 June 2020: 56,477,466 ordinary
shares), representing 7.4% of the Group's issued share capital (30
June 2020: 7.9%).
Dividend
The Board intends to pay a progressive ordinary dividend over
time, taking into consideration factors such as the prospects for
the Group's earnings, demands on the Group's financial resources,
and the markets in which the Group operates.
Accordingly, the Board has maintained the interim dividend of
4.80 pence per share (H1 2019/20: 4.80 pence per share), which will
be paid on 30 March 2021 to all shareholders on the register on 5
March 2021.
Mark Coombs
Chief Executive Officer
9 February 2021
Alternative performance measures
================================
Ashmore discloses non-GAAP financial alternative performance
measures (APMs) in order to assist shareholders' understanding of
the operational performance of the Group during the accounting
period and to make comparisons with prior periods.
The calculation of APMs is consistent with the prior year period
and the financial year ending 30 June 2020 and unless otherwise
stated reconciliations to statutory IFRS results are provided in
the Chief Executive's report. Historical reconciliations of APMs to
statutory IFRS results can be found in the respective interim
financial reports and annual reports and accounts.
Net revenue
As shown on the face of the consolidated statement of
comprehensive income, net revenue is total revenue less
distribution costs and including foreign exchange. This provides a
comprehensive view of the revenues recognised by the Group in the
period.
Net management fee margin
The net management fee margin is defined as the ratio of
management fees less distribution costs to average assets under
management for the period and is a commonly used industry
performance measure.
Variable compensation ratio
The charge for employee variable compensation as a proportion of
earnings before variable compensation, interest and tax (EBVCIT).
The linking of variable annual pay awards to the Group's
profitability is one of the principal methods by which the Group
controls its operating costs. The charge for variable compensation
is a component of personnel expenses.
EBVCIT is defined as operating profit excluding the charge for
variable compensation and seed capital-related items. The latter
comprises gains/losses on investment securities; change in
third-party interests in consolidated funds; and other expenses in
respect of consolidated funds.
EBITDA
The standard definition of earnings before interest, tax,
depreciation and amortisation is operating profit before
depreciation and amortisation. It provides a view of the operating
performance of the business before certain non-cash items,
financing income and charges, and taxation.
Adjusted net revenue, adjusted operating costs and adjusted
EBITDA
Adjusted figures exclude items relating to foreign exchange
translation and seed capital. This provides a better understanding
of the Group's operational performance excluding the mark-to-market
volatility of foreign exchange translation and seed capital
investments. These adjustments are merely reclassified within the
adjusted profit and loss account, leaving statutory profit before
tax unchanged.
Adjusted EBITDA margin
The ratio of adjusted EBITDA to adjusted net revenue, both of
which are defined above. This is an appropriate measure of the
Group's operational efficiency and its ability to generate returns
for shareholders.
Conversion of operating profits to cash
This compares adjusted EBITDA to cash generated from operations
excluding consolidated funds, and is a measure of the effectiveness
of the Group's operations at converting profits to cash.
Risk management
===============
A detailed description of the Group's risk management function
and internal control framework, which provides an ongoing process
for identifying, evaluating and managing the Group's emerging and
principal risks, was included in the 2020 Annual Report and
Accounts, together with a list of principal risks and examples of
associated controls and mitigants. This disclosure covered strategy
and business, client, treasury, investment and operational risks.
There have been no material changes to the principal risks and
associated controls and mitigants during the six-month period.
Ashmore established a subsidiary in Ireland in 2019 and
therefore was well prepared for the end of the United Kingdom's
transition period to leave the European Union on 31 December 2020.
In the event that a financial services agreement is ultimately not
reached between the two trading partners, then Ashmore Ireland
provides the Group with the ability to continue to manage
portfolios for EU-based clients.
Interim condensed consolidated statement of comprehensive
income
For the six months ended 31 December 2020
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
Notes GBPm GBPm GBPm
================================================= ===== ============ ============ ==========
Management fees 142.0 177.5 330.0
Performance fees 7.7 3.4 3.9
Other revenue 1.5 2.5 4.1
================================================= ===== ============ ============ ==========
Total revenue 5 151.2 183.4 338.0
Distribution costs (3.1) (9.2) (14.5)
Foreign exchange 6 2.6 2.6 7.0
================================================= ===== ============ ============ ==========
Net revenue 150.7 176.8 330.5
Gains/(losses) on investment securities 15 55.9 4.2 (19.1)
Change in third-party interests in consolidated
funds 15 (25.7) (0.5) 7.5
Personnel expenses (38.8) (43.7) (82.6)
Other expenses (12.0) (13.8) (26.6)
================================================= ===== ============ ============ ==========
Operating profit 130.1 123.0 209.7
Finance income 7 20.4 9.5 12.0
Share of profit/(loss) from associates 0.1 (0.1) (0.2)
================================================= ===== ============ ============ ==========
Profit before tax 150.6 132.4 221.5
Tax expense 9 (22.1) (18.2) (36.8)
================================================= ===== ============ ============ ==========
Profit for the period 128.5 114.2 184.7
Other comprehensive income/(loss), net
of related tax effect
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation differences
arising on foreign operations (68.2) (31.4) 12.8
Cash flow hedge intrinsic value gains/(losses) 1.7 0.1 (0.1)
================================================= ===== ============ ============ ==========
Other comprehensive income/(loss), net
of related tax effect (66.5) (31.3) 12.7
================================================= ===== ============ ============ ==========
Total comprehensive income for the period 62.0 82.9 197.4
================================================= ===== ============ ============ ==========
Profit attributable to:
Equity holders of the parent 127.7 112.9 182.1
Non-controlling interests 0.8 1.3 2.6
================================================= ===== ============ ============ ==========
Profit for the period 128.5 114.2 184.7
================================================= ===== ============ ============ ==========
Total comprehensive income attributable
to:
Equity holders of the parent 61.9 81.8 194.7
Non-controlling interests 0.1 1.1 2.7
================================================= ===== ============ ============ ==========
Total comprehensive income for the period 62.0 82.9 197.4
================================================= ===== ============ ============ ==========
Earnings per share
Basic 10 19.40p 16.85p 27.35p
Diluted 10 18.22p 15.84p 25.68p
================================================= ===== ============ ============ ==========
Interim condensed consolidated balance sheet
As at 31 December 2020
Unaudited Unaudited Audited
31 December 31 December 30 June
2020 2019 2020
Notes GBPm GBPm GBPm
======================================== ===== ============ ============ ========
Assets
Non-current assets
Goodwill and intangible assets 12 81.4 84.0 89.7
Property, plant and equipment 13 11.1 12.9 11.7
Investment in associates 3.2 1.2 0.6
Non-current financial assets measured
at fair value 15 29.0 31.1 28.0
Deferred acquisition costs 0.6 0.7 0.7
Deferred tax assets 29.8 32.7 30.6
======================================== ===== ============ ============ ========
155.1 162.6 161.3
======================================== ===== ============ ============ ========
Current assets
Investment securities 15 242.8 222.4 234.5
Financial assets measured at fair value 15 22.5 45.5 11.6
Trade and other receivables 78.0 89.4 96.2
Derivative financial instruments 3.1 1.4 -
Cash and cash equivalents 448.7 427.4 500.9
======================================== ===== ============ ============ ========
795.1 786.1 843.2
======================================== ===== ============ ============ ========
Financial assets held for sale 15 46.3 14.3 43.1
======================================== ===== ============ ============ ========
Total assets 996.5 963.0 1,047.6
======================================== ===== ============ ============ ========
Equity and liabilities
Capital and reserves - attributable
to equity holders of the parent
Issued capital 17 0.1 0.1 0.1
Share premium 15.6 15.6 15.6
Retained earnings 847.4 811.0 813.2
Foreign exchange reserve (39.9) (16.3) 27.6
Cash flow hedging reserve 1.6 0.1 (0.1)
======================================== ===== ============ ============ ========
824.8 810.5 856.4
Non-controlling interests 21.3 10.2 22.6
======================================== ===== ============ ============ ========
Total equity 846.1 820.7 879.0
======================================== ===== ============ ============ ========
Liabilities
Non-current liabilities
Lease liabilities 13 6.9 9.0 8.2
Deferred tax liabilities 8.7 8.3 6.9
======================================== ===== ============ ============ ========
15.6 17.3 15.1
======================================== ===== ============ ============ ========
Current liabilities
Current tax - 2.9 8.5
Derivative financial instruments - - 1.7
Lease liabilities 13 2.5 2.2 2.0
Third-party interests in consolidated
funds 15 89.4 66.3 86.1
Trade and other payables 38.6 50.8 50.7
======================================== ===== ============ ============ ========
130.5 122.2 149.0
======================================== ===== ============ ============ ========
Financial liabilities held for sale 15 4.3 2.8 4.5
======================================== ===== ============ ============ ========
Total liabilities 150.4 142.3 168.6
======================================== ===== ============ ============ ========
Total equity and liabilities 996.5 963.0 1,047.6
======================================== ===== ============ ============ ========
Interim condensed consolidated statement of changes in
equity
For the six months ended 31 December 2020
Attributable to equity holders
of the parent
===========================================================
Cash
Foreign flow
Issued Share Retained exchange hedging Non-controlling Total
capital premium earnings reserve reserve Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Audited balance at 1 July
2019 0.1 15.6 812.4 14.9 - 843.0 10.9 853.9
Profit for the period - - 112.9 - - 112.9 1.3 114.2
Other comprehensive
income/(loss):
Foreign currency translation
differences arising on
foreign operations - - - (31.2) - (31.2) (0.2) (31.4)
Cash flow hedge intrinsic
value gains - - - - 0.1 0.1 - 0.1
Total comprehensive
income/(loss) - - 112.9 (31.2) 0.1 81.8 1.1 82.9
Transactions with owners:
Purchase of own shares - - (41.1) - - (41.1) - (41.1)
Share-based payments - - 12.8 - - 12.8 - 12.8
Dividends to equity holders - - (86.0) - - (86.0) - (86.0)
Dividends to non-controlling
interests - - - - - - (1.8) (1.8)
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Total contributions and
distributions - - (114.3) - - (114.3) (1.8) (116.1)
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Unaudited balance at 31
December 2019 0.1 15.6 811.0 (16.3) 0.1 810.5 10.2 820.7
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Profit for the period - - 69.2 - - 69.2 1.3 70.5
Other comprehensive
income/(loss):
Foreign currency translation
differences arising on
foreign operations - - - 43.9 - 43.9 0.3 44.2
Cash flow hedge intrinsic
value losses - - - - (0.2) (0.2) - (0.2)
Total comprehensive
income/(loss) - - 69.2 43.9 (0.2) 112.9 1.6 114.5
Transactions with owners:
Purchase of own shares - - (48.4) - - (48.4) - (48.4)
Share-based payments - - 15.8 - - 15.8 - 15.8
Dividends to equity holders - - (34.0) - - (34.0) - (34.0)
Sale of shares to
non-controlling
interests - - (0.4) - - (0.4) 11.7 11.3
Dividends to non-controlling
interests - - - - - - (0.9) (0.9)
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Total contributions and
distributions - - (67.0) - - (67.0) 10.8 (56.2)
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Audited balance at 30 June
2020 0.1 15.6 813.2 27.6 (0.1) 856.4 22.6 879.0
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Profit for the period - - 127.7 - - 127.7 0.8 128.5
Other comprehensive
income/(loss):
Foreign currency translation
differences arising on
foreign operations - - - (67.5) - (67.5) (0.7) (68.2)
Cash flow hedge intrinsic
value gains - - - - 1.7 1.7 - 1.7
Total comprehensive
income/(loss) - - 127.7 (67.5) 1.7 61.9 0.1 62.0
Transactions with owners:
Purchase of own shares - - (23.3) - - (23.3) - (23.3)
Share-based payments - - 14.5 - - 14.5 - 14.5
Dividends to equity holders - - (84.7) - - (84.7) - (84.7)
Increase in non-controlling
interests - - - - - - 0.5 0.5
Dividends to non-controlling
interests - - - - - - (1.9) (1.9)
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Total contributions and
distributions - - (93.5) - - (93.5) (1.4) (94.9)
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Unaudited balance at 31
December 2020 0.1 15.6 847.4 (39.9) 1.6 824.8 21.3 846.1
=============================== ======== ======== ========= ========= ======== ======= =============== =======
Interim condensed consolidated cash flow statement
For the six months ended 31 December 2020
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
========================================================== ============ ============ ==========
Operating activities
Profit before tax 150.6 132.4 221.5
Adjustments for non-cash movements and items within
investing activities:
Depreciation and amortisation 1.6 1.7 3.4
Accrual for variable compensation 14.5 12.8 33.9
Foreign exchange gains (2.6) (2.6) (7.0)
Finance income (20.4) (9.5) (12.0)
Net (gains)/losses on investment securities (30.2) (3.7) 11.6
Other non-cash items (0.1) 0.1 (0.8)
========================================================== ============ ============ ==========
Cash generated from operations before working capital
changes 113.4 131.2 250.6
Changes in working capital:
Decrease/(increase) in trade and other receivables (7.6) (10.0) 9.1
Decrease/(increase) in derivative financial instruments (4.8) (2.5) 0.6
Increase/(decrease) in trade and other payables (12.1) (5.2) (5.4)
========================================================== ============ ============ ==========
Cash generated from operations 88.9 113.5 254.9
Taxes paid (24.0) (37.9) (52.1)
========================================================== ============ ============ ==========
Net cash from operating activities 64.9 75.6 202.8
========================================================== ============ ============ ==========
Investing activities
Interest and investment income received 1.6 5.3 14.7
(Purchase)/disposal of associates (2.6) 0.5 0.6
Purchase of non-current financial assets measured
at fair value (0.9) (1.4) (3.6)
Purchase of financial assets held for sale (25.4) (11.6) (43.6)
Purchase of financial assets measured at fair value (6.4) - -
Sale/(purchase) of investment securities 37.6 16.5 (9.1)
Sale of non-current financial assets measured at
fair value 2.4 1.9 2.5
Sale of financial assets held for sale 7.2 8.4 8.4
Sale of financial assets measured at fair value 20.6 11.6 25.1
Net cash on initial consolidation of seed capital
investments (4.3) (0.2) (0.4)
Purchase of property, plant and equipment (0.5) (0.8) (1.0)
========================================================== ============ ============ ==========
Net cash generated/(used) in investing activities 29.3 30.2 (6.4)
========================================================== ============ ============ ==========
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
===================================================== ============ ============ ==========
Financing activities
Dividends paid to equity holders (84.7) (86.0) (120.0)
Dividends paid to non-controlling interests (1.9) (1.8) (2.7)
Third-party subscriptions into consolidated funds 30.4 9.6 50.0
Third-party redemptions from consolidated funds (2.5) (6.1) (29.6)
Distributions paid by consolidated funds (26.1) (12.8) (1.9)
Contribution by non-controlling interests 0.5 - 11.3
Payment of lease liabilities (note 13) (1.0) (1.2) (2.3)
Interest paid (note 13) (0.2) (0.3) (0.5)
Purchase of own shares (23.3) (41.1) (89.5)
===================================================== ============ ============ ==========
Net cash used in financing activities (108.8) (139.7) (185.2)
===================================================== ============ ============ ==========
Net increase/(decrease) in cash and cash equivalents (14.6) (33.9) 11.2
Cash and cash equivalents at beginning of period 500.9 477.2 477.2
Effect of exchange rate changes on cash and cash
equivalents (37.6) (15.9) 12.5
===================================================== ============ ============ ==========
Cash and cash equivalents at end of period 448.7 427.4 500.9
===================================================== ============ ============ ==========
Cash and cash equivalents comprise:
Cash at bank and in hand 97.9 62.2 68.5
Daily dealing liquidity funds 282.3 296.0 368.0
Deposits 68.5 69.2 64.4
===================================================== ============ ============ ==========
448.7 427.4 500.9
===================================================== ============ ============ ==========
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 2020 were authorised for issue by the
Directors on 9 February 2021.
Ashmore Group plc is listed on the London Stock Exchange and
incorporated and domiciled in the United Kingdom.
2) Basis of preparation
The interim condensed consolidated financial statements have
been prepared in accordance with International Accounting Standard
34 (IAS 34) Interim Financial Reporting adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
The annual financial statements of the Group for the year ended
30 June 2021 will be prepared in accordance with International
Financial Reporting Standards (IFRSs) adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
and in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006. As
required by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 30
June 2020 which were prepared in accordance with IFRSs as adopted
by the EU.
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 2020 which are available on the Group's
website. Those statutory accounts were approved by the Board of
Directors on 10 September 2020 and have been filed with Companies
House. The report of the auditors on those accounts was
unqualified.
Going concern
The Board of Directors has considered the resilience of the
Group, taking into account its current financial position, and the
principal and emerging risks facing the business including the
impact of COVID-19 on global markets and potential implications for
the Group's financial performance. The Board has performed a going
concern assessment, including considering the impact of COVID-19 by
applying stressed scenarios, including severe but plausible
downside assumptions, and the impact on assets under management,
profitability of the Group and known commitments for a period of 12
months from the date of approval of these interim financial
statements. While there are significant wider market uncertainties
that may impact the Group, the stressed scenarios, which assumed a
significant reduction in revenue and profits for the entire 12
months' forecast period, show that the Group and Company would
continue to operate profitably and would have sufficient funds to
meet their liabilities as they fall due for a period of at least 12
months from the date of the release of these results. The interim
financial statements have therefore been prepared on a going
concern basis.
3) New accounting standards and interpretations
The Group did not implement the requirements of any standards or
interpretations that were in issue but were not required to be
adopted by the Group at the half year. No other standards or
interpretations issued and not yet effective are expected to have
an impact on the Group's consolidated financial statements.
4) Segmental information
The Group's operations are reported to and reviewed by the Board
on the basis of the investment management business as a whole,
hence the Group is treated as a single segment. The key management
information considered is adjusted EBITDA which is GBP107.2 million
for the period (H1 2019/20: adjusted EBITDA of GBP122.5 million was
derived by adjusting operating profit by GBP1.7 million of
depreciation and amortisation expense, GBP2.6 million expense
related to seed capital and GBP0.4 million of foreign exchange
gains). The additional disclosures below provide the location of
the Group's non-current assets at year end other than financial
instruments, deferred tax assets and post-employment benefit
assets. Disclosures relating to revenue by location are provided in
note 5 below.
Analysis of non-current assets by geography
As at As at As at
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
=========================== ============ ============ ========
United Kingdom and Ireland 24.7 26.1 26.4
United States 65.5 67.7 72.4
Other 6.1 5.0 3.9
=========================== ============ ============ ========
Total non-current assets 96.3 98.8 102.7
=========================== ============ ============ ========
5) Revenue
Management fees are accrued throughout the period in line with
prevailing levels of assets under management and performance fees
are recognised when the specific assessment criteria have been met
and it is highly probable that a significant income reversal will
not subsequently occur. The Group is not considered to be reliant
on any single source of revenue. None of the Group's funds provided
more than 10.0% of total revenue in the period (H1 2019/20: none;
FY2019/20: 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
2020 2019 2020
GBPm GBPm GBPm
=========================== ============ ============ =========
United Kingdom and Ireland 120.0 158.9 287.0
United States 13.1 10.4 24.3
Other 18.1 14.1 26.7
=========================== ============ ============ =========
Total revenue 151.2 183.4 338.0
=========================== ============ ============ =========
6) Foreign exchange
The foreign exchange rates which had a material impact on the
Group's results are the US dollar, the Euro, the Indonesian rupiah
and the Colombian peso.
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 2020 2019 2020 2020 2019 2020
================== ============ ============ ============ ============ ============ ============
US dollar 1.3670 1.3248 1.2356 1.3107 1.2657 1.2637
Euro 1.1172 1.1802 1.1001 1.1108 1.1381 1.1331
Indonesian rupiah 19,206 18,391 17,651 18,931 17,816 18,134
Colombian peso 4,676 4,347 4,620 4,852 4,264 4,468
================== ============ ============ ============ ============ ============ ============
Foreign exchange gains and losses are shown below.
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
======================================================= ============ ============ =========
Net realised and unrealised hedging gains 8.7 3.1 1.5
Translation gains/(losses) on non-Sterling denominated
monetary assets and liabilities (6.1) (0.5) 5.5
======================================================= ============ ============ =========
Total foreign exchange gains 2.6 2.6 7.0
======================================================= ============ ============ =========
7) Finance income
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
========================================================== ============ ========================== =========
Interest and investment income 2.2 6.0 11.1
Net realised gains on seed capital investments measured
at fair value 3.3 1.5 4.0
Net unrealised gains/(losses) on seed capital investments
measured at fair value 15.1 2.3 (2.6)
Interest expense on lease liabilities (note 13) (0.2) (0.3) (0.5)
========================================================== ============ ========================== =========
Net finance income 20.4 9.5 12.0
========================================================== ============ ========================== =========
Included within net realised and unrealised gains on seed
capital investments measured at fair value are GBP10.9 million
gains in relation to held for sale investments (note 15a), GBP3.8
million gains on financial assets measured at FVTPL (note 15b) and
GBP3.2 million gains on non-current financial assets measured at
fair value (note 15c).
Included within interest and investment income are gains of
GBP1.5 million from investment securities on consolidated funds
(note 15d).
8) Share-based payments
The cost related to share-based payments recognised by the Group
in the statement of comprehensive income is shown below:
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
=================================== ============= ============= =========
Omnibus Plan 16.3 16.6 33.5
Phantom Bonus Plan 0.1 0.5 0.4
=================================== ============= ============= =========
Total share-based payments expense 16.4 17.1 33.9
=================================== ============= ============= =========
The total expense recognised for the period in respect of
equity-settled share-based payment awards was GBP14.5 million (H1
2019/20: GBP13.1 million; FY2019/20: GBP28.9 million).
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
2020 2019 2020
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 43,516,936 40,668,934 40,668,934
Granted 8,667,215 8,180,778 8,180,778
Vested (10,433,669) (5,038,093) (5,208,808)
Forfeited (414,822) (104,792) (123,968)
===================================== =============== =============== ===============
Outstanding at the end of the period 41,335,660 43,706,827 43,516,936
===================================== =============== =============== ===============
Cash-settled awards
At the beginning of the period 315,185 255,622 255,622
Granted 778 69,125 69,125
Vested (32,194) (9,062) (9,062)
Forfeited - - (500)
===================================== =============== =============== ===============
Outstanding at the end of the period 283,769 315,685 315,185
===================================== =============== =============== ===============
Total awards
At the beginning of the period 43,832,121 40,924,556 40,924,556
Granted 8,667,993 8,249,903 8,249,903
Vested (10,465,863) (5,047,155) (5,217,870)
Forfeited (414,822) (104,792) (124,468)
===================================== =============== =============== ===============
Outstanding at the end of the period 41,619,429 44,022,512 43,832,121
===================================== =============== =============== ===============
The weighted average share price of awards granted to employees
under the Omnibus Plan during the period was GBP3.62 (H1 2019/20:
GBP4.38; FY2019/20: GBP4.38), as determined by reference to the
average Ashmore Group plc closing share price for the five business
days prior to grant.
The liability arising from cash-settled awards under the Omnibus
Plan at the end of the period and reported within trade and other
payables in the interim condensed consolidated balance sheet is
GBP0.8 million (H1 2019/20: GBP1.0 million; FY2019/20: GBP0.8
million) of which 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
2020 2019 2020
GBPm GBPm GBPm
========================================================= ============ ============ =========
Current tax
UK corporation tax on profits for the period 7.9 11.8 24.7
Overseas corporation tax charge 10.8 9.1 16.8
Adjustments in respect of prior periods - - (2.8)
========================================================= ============ ============ =========
18.7 20.9 38.7
Deferred tax
Origination and reversal of temporary differences 3.4 (2.7) (1.2)
Effect on deferred tax balance of changes in corporation
tax rates - - (0.7)
Tax expense for the period 22.1 18.2 36.8
========================================================= ============ ============ =========
Factors affecting tax charge for the period
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
=========================================================== ============ ============ =========
Profit before tax 150.6 132.4 221.5
=========================================================== ============ ============ =========
Profit on ordinary activities multiplied by the prevailing
UK tax rate for the financial year of 19.0% (H1 2019/20:
19.0%; FY2019/20: 19.0%) 28.6 24.5 42.1
Effects of:
Non-deductible expenses 0.2 0.1 0.5
Deduction in respect of vested shares (2.3) (3.8) (1.2)
Different rate of taxes on overseas profits (1.1) (1.2) (4.2)
Non-taxable income (3.0) (1.5) (0.1)
Derecognition of historical deferred tax assets - 0.2 2.9
Other items (0.3) (0.1) 0.3
Adjustments in respect of prior periods - - (3.5)
=========================================================== ============ ============ =========
Tax expense for the period 22.1 18.2 36.8
=========================================================== ============ ============ =========
10) Earnings per share
Basic earnings per share at 31 December 2020 of 19.40 pence (H1
2019/20: 16.85 pence; FY2019/20: 27.35 pence) is calculated by
dividing the profit after tax for the financial period attributable
to equity holders of the parent of GBP127.7 million (H1 2019/20:
GBP112.9 million; FY2019/20: GBP182.1 million) by the weighted
average number of ordinary shares in issue during the period,
excluding own shares.
Diluted earnings per share is calculated based on basic earnings
per share adjusted for all dilutive potential ordinary shares.
There is no difference between the profit for the year attributable
to equity holders of the parent used in the basic and diluted
earnings per share calculations.
Reconciliation of the weighted average number of shares used in
calculating basic and diluted earnings per share is shown
below.
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
Number of Number of Number of
ordinary ordinary ordinary
shares shares shares
===================================================== ============ ============ ===========
Weighted average number of ordinary shares used in
the calculation of basic earnings per share 658,339,545 670,451,921 666,019,404
Effect of dilutive potential ordinary shares - share
awards 42,551,290 42,895,334 43,241,702
===================================================== ============ ============ ===========
Weighted average number of ordinary shares used in
the calculation
of diluted earnings per share 700,890,835 713,347,255 709,261,106
===================================================== ============ ============ ===========
11) Dividends
Dividends paid
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
================================================= ============ ============ =========
Final dividend for FY2019/20: 12.10p (FY2018/19:
12.10p) 84.7 86.0 86.0
Interim dividend for FY2019/20: 4.80p - - 34.0
================================================= ============ ============ =========
84.7 86.0 120.0
================================================= ============ ============ =========
In addition, the Group paid GBP1.9 million (H1 2019/20: GBP1.8
million; FY2019/20: GBP2.7 million) in dividends to non-controlling
interests.
Dividends declared/proposed
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
Company pence pence pence
==================================== ============ ============ =========
Interim dividend declared per share 4.80 4.80 4.80
Final dividend proposed per share - - 12.10
==================================== ============ ============ =========
4.80 4.80 16.90
==================================== ============ ============ =========
The Board has approved an interim dividend for the six months to
31 December 2020 of 4.80 pence per share (six months
to 31 December 2019: 4.80 pence per share; final dividend for
the year to 30 June 2020: 12.10 pence per share) payable on
30 March 2021 to shareholders on the register on 5 March
2021.
12) Goodwill and intangible assets
Fund management
intangible
Goodwill assets Total
GBPm GBPm GBPm
========================================= ======== =============== ======
Cost (at original exchange rate)
At 31 December 2020 and 30 June 2020 70.4 0.9 71.3
========================================= ======== =============== ======
Accumulated amortisation and impairment
========================================= ======== =============== ======
At 30 June 2019 - (0.1) (0.1)
Amortisation charge for the period - (0.1) (0.1)
At 31 December 2019 - (0.2) (0.2)
Amortisation charge for the period - (0.1) (0.1)
At 30 June 2020 - (0.3) (0.3)
Amortisation charge for the period - (0.1) (0.1)
At 31 December 2020 - (0.4) (0.4)
========================================= ======== =============== ======
Net book value
========================================= ======== =============== ======
At 30 June 2019 86.5 0.8 87.3
Accumulated amortisation for the period - (0.1) (0.1)
FX revaluation through reserves* (3.2) - (3.2)
========================================= ======== =============== ======
At 31 December 2019 83.3 0.7 84.0
Accumulated amortisation for the period - (0.1) (0.1)
FX revaluation through reserves* 5.8 - 5.8
========================================= ======== =============== ======
At 30 June 2020 89.1 0.6 89.7
Accumulated amortisation for the period - (0.1) (0.1)
FX revaluation through reserves* (8.2) - (8.2)
========================================= ======== =============== ======
At 31 December 2020 80.9 0.5 81.4
========================================= ======== =============== ======
* FX revaluation through reserves is a result of the
retranslation of US dollar-denominated intangibles and
goodwill.
Goodwill
The Group's goodwill balance relates to the acquisition of
subsidiaries.
Goodwill acquired in a business combination is allocated to the
cash-generating units that are expected to benefit from that
business combination. It is the Group's judgement that the lowest
level of cash-generating unit used to determine impairment is the
investment management segment level. The Group has assessed that it
consists of a single cash-generating unit for the purposes of
monitoring and assessing goodwill for impairment. This reflects the
Group's global operating model, based on a single operating
platform, into which acquired businesses are fully integrated and
from which acquisition-related synergies are expected to be
realised.
During the period to 31 December 2020, no factors indicating
potential impairment of goodwill were noted. Based on the
calculation as at 31 December 2020 using a market share price of
GBP4.31, the recoverable amount was in excess of the carrying value
of goodwill and no impairment was implied. In addition, the
sensitivity of the recoverable amount to a 10% change in the
Company's market share price will not lead to any impairment.
Therefore, no impairment loss has been recognised in the current or
preceding periods.
Fund management contracts
Intangible assets comprise fund management contracts and
contractually agreed share of carried interest recognised by the
Group on business combinations.
During the period to 31 December 2020, a review process was
undertaken to identify factors indicating whether the Group's fund
management contracts intangible assets were impaired. None were
identified and as a consequence, no impairment charge has been
recognised (H1 2019/20: GBPnil; FY2019/20: GBPnil). The remaining
amortisation periods for fund management contracts range between
one to four years.
13) Leases
The Group's property, plant and equipment include right-of-use
assets recognised on office leases for which the Group is a lessee
under operating lease arrangements. Information about leases is
provided below.
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
================================================= ============ ============ =========
Property, plant and equipment owned by the Group 2.0 2.0 1.8
Right-of-use assets 9.1 10.9 9.9
Net book value 11.1 12.9 11.7
================================================= ============ ============ =========
Lease liabilities are presented in the consolidated balance
sheet as follows:
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
======================== =========== =========== =======
Current 2.5 2.2 2.0
Non-current 6.9 9.0 8.2
Total lease liabilities 9.4 11.2 10.2
======================== =========== =========== =======
The carrying value of the Group's right-of-use assets, lease
liabilities and the movement during the period are set out
below.
Right-of-use
assets Lease liabilities
GBPm GBPm
=================================================== ============ =================
At 1 July 2019 12.6 12.8
Lease payments - (1.5)
Interest expense (recognised in finance expense) - 0.3
Depreciation charge (recognised in other expenses) (1.3) -
FX revaluation through reserves (0.4) (0.4)
=================================================== ============ =================
At 31 December 2019 10.9 11.2
Lease payments - (1.3)
Interest expense (recognised in finance expense) - 0.2
Depreciation charge (recognised in other expenses) (1.2) -
FX revaluation through reserves 0.2 0.1
=================================================== ============ =================
At 30 June 2020 9.9 10.2
Additions 0.5 0.5
Lease payments - (1.2)
Interest expense (recognised in finance expense) - 0.2
Depreciation charge (recognised in other expenses) (1.1) -
FX revaluation through reserves (0.2) (0.3)
=================================================== ============ =================
At 31 December 2020 9.1 9.4
=================================================== ============ =================
Total cash outflow included within financing activities in the
consolidated cash flow statement in respect of principal and
interest paid on lease liabilities during the period amounted to
GBP1.2 million.
14) Fair value of financial instruments
The accounting policies relating to the estimation of fair
values are consistent with those applied in the preparation of the
Group's Annual Report and Accounts for the year ended 30 June
2020.
The Group has an established control framework with respect to
the measurement of fair values. This framework includes committees
that have overall responsibility for all significant fair value
measurements. Each committee regularly reviews significant inputs
and valuation adjustments. If third-party information is used to
measure fair value, the team assesses and documents the evidence
obtained from the third parties to support such valuations. There
are no material differences between the carrying amounts of
financial assets and liabilities and their fair values at the
balance sheet date.
Fair value hierarchy
The Group measures fair values using the following fair value
levels that reflect the significance of inputs used in making the
measurements, based on the degree to which the fair value is
observable:
- Level 1: Valuation is based upon a quoted market price in an
active market for an identical instrument. This fair value measure
relates to the valuation of quoted and exchange traded equity and
debt securities.
- Level 2: Valuation techniques are based upon observable
inputs, either directly (i.e. as prices) or indirectly (i.e.
derived from prices). This fair value measure relates to the
valuation of quoted equity securities in inactive markets or in
interests in unlisted funds whose net asset values are referenced
to the fair values of the listed or exchange traded securities held
by those funds. Valuation techniques may include using a broker
quote in an inactive market or an evaluated price based on a
compilation of primarily observable market information utilising
information readily available via external sources.
- Level 3: Fair value measurements are derived from valuation
techniques that include inputs not based on observable market
data.
For financial instruments that are recognised at fair value on a
recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by reassessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period.
The fair value hierarchy of financial instruments which are
carried at fair value is summarised below:
At 31 December At 31 December
2020 2019 At 30 June 2020
============================ ========================== ==========================
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 185.1 41.4 16.3 242.8 97.7 75.5 49.2 222.4 125.1 60.6 48.8 234.5
Financial assets
held for sale - 46.3 - 46.3 - 14.3 - 14.3 - 43.1 - 43.1
Financial assets
at FVTPL - 21.0 1.5 22.5 - 44.7 0.8 45.5 - 10.9 0.7 11.6
Non-current financial
assets - 0.1 28.9 29.0 - 0.5 30.6 31.1 - 0.1 27.9 28.0
Derivative financial
instruments - 3.1 - 3.1 - 1.4 - 1.4 - - - -
Total financial
assets 185.1 111.9 46.7 343.7 97.7 136.4 80.6 314.7 125.1 114.7 77.4 317.2
====================== ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== ===== =====
Financial liabilities
Third-party interests
in consolidated
funds 81.2 2.1 6.1 89.4 34.7 20.1 11.5 66.3 65.1 10.6 10.4 86.1
Financial liabilities
held for sale - 4.3 - 4.3 - 2.8 - 2.8 - 4.5 - 4.5
Derivative financial
instruments - - - - - - - - - 1.7 - 1.7
Total financial
liabilities 81.2 6.4 6.1 93.7 34.7 22.9 11.5 69.1 65.1 16.8 10.4 92.3
====================== ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== ===== =====
The Group recognises transfers into and transfers out of fair
value hierarchy levels as at the end of the reporting period. There
were no transfers between level 1, level 2 and level 3 of the fair
value hierarchy during the period.
Financial instruments not measured at fair value
Financial assets and liabilities that are not measured at fair
value include cash and cash equivalents, trade and other
receivables, and trade and other payables. The carrying value of
financial assets and financial liabilities not measured at fair
value is considered a reasonable approximation of fair value as at
31 December 2020, 31 December 2019 and 30 June 2020.
Fair value measurements using significant unobservable inputs
(level 3)
The following table presents the changes in level 3 items for
the period.
Third-party
Financial Non-current interests
Investment assets at financial in consolidated
securities FVTPL assets funds
GBPm GBPm GBPm GBPm
===================================== =========== ========== =========== ================
At 31 December 2019 49.2 0.8 30.6 11.5
Additions 7.1 - 2.2 4.5
Disposals (1.4) (0.1) - -
Unrealised gains/(losses) recognised
in finance income (6.6) - (5.4) (5.6)
Unrealised gains/(losses) recognised
in reserves 0.5 - 0.5 -
===================================== =========== ========== =========== ================
At 30 June 2020 48.8 0.7 27.9 10.4
Additions 43.3 1.2 0.9 21.7
Disposals (70.8) (0.4) (2.4) (25.6)
Unrealised gains/(losses) recognised
in finance income 0.7 - 2.5 0.1
Unrealised gains/(losses) recognised
in reserves (5.7) - - (0.5)
At 31 December 2020 16.3 1.5 28.9 6.1
===================================== =========== ========== =========== ================
Valuation of level 3 financial assets recognised at fair value
on a recurring basis using valuation techniques
Investments valued using valuation techniques include financial
investments which, by their nature, do not have an externally
quoted price based on regular trades, and financial investments for
which markets are no longer active as a result of market conditions
e.g. market illiquidity. The valuation techniques used in the
estimation of fair values are consistent with those applied in the
preparation of the Group's Annual Report and Accounts for the year
ended 30 June 2020.
The following tables show the valuation techniques and the
significant unobservable inputs used to estimate the fair value of
level 3 investments as at 31 December 2020 and 30 June 2020, and
the associated sensitivity to changes in unobservable inputs to a
reasonable alternative:
Fair value
at 31
December Significant Change in
Asset class and valuation 2020 unobservable Range of Sensitivity fair value
technique GBPm input estimates factor GBPm
-------------------------- ---------- --------------- ---------- ----------- -----------
Unquoted securities
Market multiple and
discount 16.0 EBITDA multiple 10x-20x +/- 1x +/- 1.6
Marketability
adjustment 10%-40% +/- 5% -/+ 1.1
--------------- ---------- ----------- -----------
Unquoted funds
Net assets approach 30.7 Net asset value 1x +/- 5% +/- 1.5
-------------------------- ---------- --------------- ---------- ----------- -----------
Total level 3 investments 46.7
-------------------------- ---------- --------------- ---------- ----------- -----------
Fair value
at 30 Significant Change in
Asset class and valuation June 2020 unobservable Range of Sensitivity fair value
technique GBPm input estimates factor GBPm
---------------------------- ---------- --------------- ---------- ----------- -----------
Unquoted securities
Market multiple and
discount 14.0 EBITDA multiple 10x-20x +/- 1x +/- 1.4
Marketability
adjustment 10%-30% +/- 5% -/+ 0.9
--------------- ---------- ----------- -----------
Market multiple, discounted
cash flows and discount 34.6 Market multiple 5x-10x +/- 1x +/- 2.4
Marketability
adjustment 10%-30% +/- 5% -/+ 4.4
Discount rate 10%-20% +/- 5% -/+ 4.0
--------------- ---------- ----------- -----------
Unquoted funds
Net assets approach 28.8 Net asset value 1x +/- 5% +/- 1.4
---------------------------- ---------- --------------- ---------- ----------- -----------
Total level 3 investments 77.4
---------------------------- ---------- --------------- ---------- ----------- -----------
The sensitivity demonstrates the effect of a change in one
unobservable input while other assumptions remain unchanged. There
may be a correlation between the unobservable inputs and other
factors that have not been considered. It should also be noted that
some of the sensitivities are non-linear, therefore, larger or
smaller impacts should not be interpolated or extrapolated from
these results.
15) Seed capital investments
The Group considers itself a sponsor of an investment fund when
it facilitates the establishment of the fund in which the Group is
the investment manager. The Group ordinarily invests seed capital
in order to provide initial scale and facilitate the marketing of
funds to third-party investors. Aggregate interests held by the
Group include seed capital, management fees and performance
fees.
a) Financial assets and liabilities held for sale
Where Group companies invest seed capital into funds operated
and controlled by the Group and the Group is actively seeking to
reduce its investment, and it is considered highly probable that it
will relinquish control within a year, the interests in the funds
are treated as held for sale and are recognised as financial assets
and liabilities held for sale. During the period, three funds (H1
2019/20: two funds; FY2019/20: six funds) 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 2020 were as follows:
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
==================================== =========== =========== =======
Financial assets held for sale 46.3 14.3 43.1
Financial liabilities held for sale (4.3) (2.8) (4.5)
==================================== =========== =========== =======
Financial assets held for sale 42.0 11.5 38.6
==================================== =========== =========== =======
Investments cease to be classified as held for sale when they
are no longer controlled by the Group. A loss of control may happen
through sale of the investment and/or dilution of the Group's
holding. When investments cease to be classified as held for sale
they are classified as financial assets measured at FVTPL. During
the period, no fund (H1 2019/20: none; FY2019/20: none) was
transferred to the FVTPL category.
If the fund remains under the control of the Group for more than
one year from the original investment date, it will cease to be
classified as held for sale, and will be consolidated line by line
after it is assessed that the Group controls the investment fund in
accordance with the requirements of IFRS 10. During the period,
three funds (H1 2019/20: three funds; FY2019/20: three funds) with
an aggregate carrying amount of GBP28.1 million (H1 2019/20:
GBP35.6 million; FY2019/20: GBP35.7 million) were transferred to
consolidated funds. There was no impact on net assets or total
comprehensive income as a result of the transfer.
Included within finance income are net gains of GBP10.9 million
(H1 2019/20: net gains of GBP0.9 million; FY2019/20: net gains of
GBP2.8 million) in relation to held for sale investments (refer to
note 7).
As the Group considers itself to have one business segment
(refer to note 4), no additional segmental disclosure of held for
sale assets or liabilities is applicable.
b) Financial assets measured at fair value through profit or
loss
Financial assets measured at FVTPL at 31 December 2020 comprise
shares held in debt and equity funds as follows:
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
Equity funds 13.8 36.7 3.2
Debt funds 8.7 8.8 8.4
======================================== =========== =========== =======
Financial assets measured at fair value 22.5 45.5 11.6
======================================== =========== =========== =======
Included within finance income are net gains of GBP3.8 million
(H1 2019/20: net gains of GBP2.2 million; FY2019/20: net losses of
GBP0.8 million) on the Group's financial assets measured at
FVTPL.
c) Non-current financial assets measured at fair value
Non-current financial assets relate to the Group's investments
in closed-end funds and are designated as FVTPL. Fair value is
assessed by taking account of the extent to which potential
dilution of gains or losses may arise as a result of additional
investors subscribing to the fund where the final close of a fund
has not occurred.
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
==================================================== =========== =========== =======
Real estate funds 2.4 4.2 3.5
Infrastructure funds 17.4 19.4 17.5
Other funds 9.2 7.5 7.0
==================================================== =========== =========== =======
Non-current financial assets measured at fair value 29.0 31.1 28.0
==================================================== =========== =========== =======
Included within finance income are net gains of GBP3.2 million
(H1 2019/20: net gains of GBP0.7 million; FY2019/20: net losses of
GBP4.5 million) on the Group's non-current financial assets
measured at fair value.
d) Consolidated funds
The Group has consolidated 13 investment funds as at 31 December
2020 (31 December 2019: 14 investment funds; 30 June 2020: 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
2020 2019 2020
GBPm GBPm GBPm
============================================ =========== =========== =======
Investment securities* 242.8 222.4 234.5
Cash and cash equivalents 7.7 10.2 10.8
Other* - 0.9 1.0
Third-party interests in consolidated funds (89.4) (66.3) (86.1)
============================================ =========== =========== =======
Consolidated seed capital investments 161.1 167.2 160.2
============================================ =========== =========== =======
* Investment securities represent trading securities held by
consolidated investment funds and are designated as at FVTPL.
Further detailed information at the security level is available in
the individual fund financial statements. Other includes derivative
financial instruments, trade receivables, trade payables and
accruals.
The maximum exposure to loss is the carrying amount of the
assets held. The Group has not provided financial support or
otherwise agreed to be responsible for supporting any consolidated
fund financially.
Included within the interim condensed consolidated statement of
comprehensive income are net gains of GBP30.9 million (H1 2019/20:
net gains of GBP4.6 million; FY2019/20: net losses of GBP9.0
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
2020 2019 2020
GBPm GBPm GBPm
====================================================== =========== =========== =======
Investment income 1.5 2.0 4.8
Gains/(losses) on investment securities 55.9 4.2 (19.1)
Change in third-party interests in consolidated funds (25.7) (0.5) 7.5
Other expenses (0.8) (1.1) (2.2)
====================================================== =========== =========== =======
Net gains/(losses) on consolidated funds 30.9 4.6 (9.0)
====================================================== =========== =========== =======
Included in the Group's cash generated from operations is GBP0.3
million cash utilised in operations (H1 2019/20: GBP1.9 million
cash utilised in operations; FY2019/20: GBP3.0 million cash
utilised in operations) relating to consolidated funds.
As at 31 December 2020, the Group's consolidated funds were
domiciled in Guernsey, Luxembourg, Saudi Arabia and the United
States.
16) Financial risk management
The Group is subject to strategic, business, client, investment,
operational and treasury risks throughout its business as discussed
in the Risk management section of the Group's Annual Report for the
year ended 30 June 2020, 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 2020.
17) Share capital
Authorised share capital
Number of Nominal value
shares GBP'000
=========================================================== =========== =============
Ordinary shares of 0.01p each at 31 December 2020, 30 June
2020 and 31 December 2019 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 2020 31 December 2019 30 June 2020
2020 Nominal 2019 Nominal 2020 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.
As at 31 December 2020, there were equity-settled share awards
issued under the Omnibus Plan totalling 41,335,660 shares (31
December 2019: 43,706,827 shares; 30 June 2020: 43,516,936 shares)
that have release dates ranging from September 2021 to October
2025.
18) Own shares
The Trustees of The Ashmore 2004 Employee Benefit Trust (EBT)
acquire and hold shares in Ashmore Group plc with a view to
facilitating the vesting of share awards. As at 31 December 2020,
the EBT owned 52,430,131 (31 December 2019: 43,648,181; 30 June
2020: 56,477,466) ordinary shares of 0.01p with a nominal value of
GBP5,243 (31 December 2019: GBP4,365; 30 June 2020: GBP5,648) and
shareholders' funds are reduced by GBP180.1 million (31 December
2019: GBP144.8 million; 30 June 2020: GBP192.7 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.
19) Related party transactions
Related parties of the Group include key management personnel,
close family members of key management personnel, subsidiaries,
associates, joint ventures, Ashmore funds, the EBT and the Ashmore
Foundation.
Key management personnel
The compensation paid to or payable to key management personnel
is shown below:
6 months 6 months 12 months
to to to
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
=================================== ============= ============= =========
Short-term employee benefits 0.1 0.1 0.8
Defined contribution pension costs - - -
Share-based payment benefits - - 0.4
=================================== ============= ============= =========
0.1 0.1 1.2
=================================== ============= ============= =========
Short-term benefits include salary and fees, benefits and cash
bonus. 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 2019/20 and FY2019/20: none).
Aggregate key management personnel interests in consolidated funds
at 31 December 2020 were GBP33.1 million (31 December 2019: GBP29.3
million; 30 June 2020: GBP33.9 million).
Transactions with Ashmore funds
During the period, the Group received GBP69.1 million of gross
management fees and performance fees (H1 2019/20: GBP88.7 million;
FY2019/20: GBP174.9 million) from the 101 funds (H1 2019/20: 111
funds; FY2019/20: 109 funds) it manages and which are classified as
related parties. As at 31 December 2020, the Group had receivables
due from funds of GBP10.8 million (31 December 2019: GBP4.6
million; 30 June 2020: GBP35.0 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 2020, the loan outstanding was GBP174.5 million
(31 December 2019: GBP135.1 million; 30 June 2020: GBP167.0
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 GBP38,900 to
the Foundation during the period to 31 December 2020 (H1 2019/20:
GBP12,600; FY2019/20: GBP102,800).
20) Commitments
Undrawn investment commitments
As at As at As at
31 December 31 December 30 June
2020 2019 2020
GBPm GBPm GBPm
===================================================== ============ ============ ========
Ashmore Andean Fund II, LP 0.1 0.1 0.3
Ashmore Avenida Colombia Real Estate Fund I (Cayman)
LP 0.1 0.1 0.1
Ashmore I - CAF Colombian Infrastructure Senior Debt
Fund 9.9 11.2 11.6
Ashmore Special Opportunities Fund LP - 7.4 8.0
Total undrawn investment commitments 10.1 18.8 20.0
===================================================== ============ ============ ========
21) Post-balance sheet events
There are no post-balance sheet events that require adjustment
or disclosure in these interim condensed consolidated financial
statements.
22) Accounting estimates and judgements
In preparing these interim condensed consolidated financial
statements the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were substantially the same as those that
applied to the Annual Report and Accounts for the year ended 30
June 2020.
Cautionary statement regarding forward looking statements
It is possible that this document could or may contain forward
looking statements that are based on current expectations or
beliefs, as well as assumptions about future events. These forward
looking statements can be identified by the fact that they do not
relate only to historical or current facts. Forward looking
statements often use words such as anticipate, target, expect,
estimate, intend, plan, goal, believe, will, may, should, would,
could or other words of similar meaning.
Undue reliance should not be placed on any such statements
because, by their very nature, they are subject to known and
unknown risks and uncertainties and can be affected by other
factors that could cause actual results, and the Group's plans and
objectives, to differ materially from those expressed or implied in
the forward looking statements. There are several factors that
could cause actual results to differ materially from those
expressed or implied in forward looking statements. Among the
factors that could cause actual results to differ materially from
those described in the forward looking statements are changes in
the global, political, economic, business, competitive, market and
regulatory forces, future exchange and interest rates, changes in
tax rates and future business combinations or dispositions. The
Group undertakes no obligation to revise or update any forward
looking statement contained within this document, regardless of
whether those statements are affected as a result of new
information, future events or otherwise.
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
- the interim condensed consolidated financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union; and
- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period and any changes in the related party transactions
described in the last Annual Report that could do so.
By order of the Board
Mark Coombs
Chief Executive Officer
9 February 2021
Independent Review Report to Ashmore Group plc
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2020 which comprises the consolidated
statement of comprehensive income, consolidated balance sheet,
consolidated statement of changes in equity, consolidated cash flow
statement and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2020 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union
and the Disclosure Guidance and Transparency Rules (the DTR) of the
UK's Financial Conduct Authority (the UK FCA).
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
The latest annual financial statements of the Group were
prepared in accordance with IFRSs as adopted by the EU and the next
annual financial statements will be prepared in accordance with
IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006. The Directors are responsible for preparing the
condensed set of financial statements included in the half- yearly
financial report in accordance with IAS 34 Interim Financial
Reporting adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Thomas Brown
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
9 February 2021
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