TIDMASHM
RNS Number : 4849L
Ashmore Group PLC
06 September 2023
Ashmore Group plc
6 September 2023
Results for the year ended 30 June 2023
Ashmore Group plc (Ashmore, the Group), the specialist Emerging
Markets asset manager, today announces its audited results for the
year ended 30 June 2023.
- Financial performance reflects early point in recovery cycle
- Assets under management (AuM) of US$55.9 billion(1)
- Positive performance of US$3.4 billion as Ashmore outperformed strong market returns
- Net outflow of $11.5 billion as a result of institutional
de-risking, primarily by developed world investors
- Momentum building, higher performance and improved net flows in H2
- Adjusted net revenue of GBP195.4 million, 24% lower YoY and
reflecting opening AuM 23% below prior year average AuM level
- Adjusted operating costs reduced by 4% YoY. Variable
remuneration reduced by 24% YoY, representing 25% of EBVCIT
- Adjusted EBITDA of GBP106.2 million, 35% lower YoY, and adjusted EBITDA margin of 54%
- Profit before tax of GBP111.8 million, 6% lower YoY,
benefiting from lower, unrealised mark-to-market seed capital
losses and higher interest on cash balances
- Diluted EPS of 12.2 pence, 4% lower than in the prior year
- Consistent strong and liquid balance sheet with over GBP700
million of capital resources including c.GBP470 million of cash
- Final ordinary dividend maintained at 12.1 pence per share, to
give total dividends per share of 16.9 pence
- Active management delivering outperformance in a stronger year for Emerging Markets
- Index returns of +2% to +11% over the 12 months
- Improving relative performance: 67% of AuM outperforming
benchmarks over one year; 69% over three years; and 49% over five
years (30 June 2022: 45%, 28% and 48%, respectively)
- Consistent strategy implementation with meaningful AuM growth available in each phase
- Phase 1 offers upside from higher allocations, particularly
following a period of market volatility
- Phase 2 ongoing, diversification through equities,
alternatives capital raising and cyclical upside from intermediary
retail flows
- Phase 3 successfully delivering diversification benefits, and
local markets network can expand over time. AuM from Emerging
Markets clients increased by US$1.1 billion from 27% to 33% of
Group AuM
- Clear opportunity for further recovery in Emerging Markets asset prices
- Consistent structural themes support long-term Emerging
Markets growth, assets currently undervalued
- Emerging Markets have controlled inflation and central banks
are cutting rates; GDP growth is significantly higher than in the
developed world; China stimulus to counter weak consumer
confidence
- Valuations remain highly attractive
Commenting on the Group's results, Mark Coombs, Chief Executive
Officer, Ashmore Group said:
"Ashmore has delivered meaningful investment outperformance for
clients this year and momentum is building as the recovery in
Emerging Markets continues. While the Group's financial performance
naturally lags this pick-up in markets and relative performance, as
has been experienced after previous down cycles, the consistent
strategy underpins Ashmore's medium-term growth potential and the
business model is designed to mitigate the impact of market
volatility.
"There is mounting evidence that the negative cycle has turned
and, while the recovery may not be a straight line, it is
well-supported by improving fundamentals across the larger emerging
countries. Some investors remain cautious, but client activity
levels are increasing and the combination of positive performance
and attractive valuations available across Emerging Markets should
drive capital flows over the medium term.
"Ashmore remains highly profitable, is delivering outperformance
for clients and has a scalable operating platform, which means it
is well-positioned to benefit from the ongoing recovery in Emerging
Markets."
1. As reported on 14 July 2023.
Analysts briefing
There will be a presentation for sell-side analysts at 9.30am on
6 September 2023 at UBS, 5 Broadgate, London, EC2M 2QS. A copy of
the presentation will be made available on the Group's website at
ir.ashmoregroup.com.
Contacts
For further information please contact:
Ashmore Group plc
Tom Shippey, Group Finance Director +44 (0)20 3077 6191
Paul Measday, Investor Relations +44 (0)20 3077 6278
FTI Consulting
Neil Doyle +44 (0)7771 978 220
Kit Dunford +44 (0)7717 417 038
CEO review
Consistent strategy implementation
With the experience of more than 30 years of specialist
investing, Ashmore's strategy is to capitalise on the long-term
opportunitiesin Emerging Markets, and its established business
model responds to the shorter-term impact of market volatility.
Ashmore is delivering outperformance for clients and is
well-positioned for an ongoing recovery in markets.
The past year provided encouraging evidence that the cyclical
recovery has begun across Emerging Markets, with higher asset
prices, an improving growth outlook, falling inflation and the
benefits of a weaker US dollar. There remains, however, a degree of
caution among some investors, particularly those in the US, given
macroeconomic concerns such as policy tightening by developed world
central banks and conflict or geopolitical tension in Europe and
Asia. Additionally, the largest Emerging Market, China, needs to
navigate the headwinds of lower consumer confidence and demand
following the reopening of its economy.
Against this backdrop, Ashmore has delivered meaningful
outperformance for clients and has continued to execute its
long-term growth strategy, and its business model remains
appropriate to manage the impact of market volatility. As has been
experienced in previous cycles, after a period of challenging
market conditions the Group's financial performance naturally lags
the turn in markets and the delivery of investment outperformance.
The Group started this financial year with AuM of US$64 billion,
which was more than 20% below the level of average AuM in the prior
financial year and therefore represented a notable revenue headwind
for the current year. There was encouraging momentum over the year
with client activity levels, net flows and investment performance
higher in H2 compared with H1. Overall, lower average AuM resulted
in a 35% YoY decline in adjusted EBITDA, but as a result of lower
losses on the Group's seed capital investments and higher interest
earned on cash balances, profit before tax was 6% lower and diluted
EPS fell by 4%. Consequently, the Board has recommended an
unchanged final ordinary dividend.
Undiminished long-term growth and investment opportunities in
Emerging Markets
Irrespective of events in the short term, the longer-term
potential of Emerging Markets remains undiminished. Superior
economic growth is expected to continue as a result of powerful
convergence trends with the developed world. These trends are
supported by ongoing reforms, particularly the shift by larger
countries to local currency funding and high-quality policymaking
that delivers better economic management and greater resilience to
external shocks. The resulting investment opportunities for a
specialist, active manager are diversified across an investment
universe spanning more than 70 emerging countries and with
approximately US$75 trillion of fixed income securities and equity
market capitalisation.
Appropriate strategy to deliver long-term growth
The Group's three-phase strategy is to capture these
opportunities while seeking to protect the Group from some of the
more significant challenges facing active asset managers such as
the threat of passive competition. Inevitably, given the cyclical
nature of markets, progress made in each of the three phases will
vary.
Phase one
Risk aversion by some investors resulted in an adjustment to
allocations to Emerging Markets in the year, yet this was more
pronounced among developed world investors than those based in
Emerging Markets. Ashmore's AuM from the latter increased over the
year by US$1.1 billion and from 27% to 33% of total AuM.
While interest rates have increased in both developed and
emerging countries, there is additional yield available in Emerging
Markets that helps to compensate for higher risk, whether perceived
or actual, and the merits of equity allocations are underpinned by
the superior growth prospects of emerging economies. Therefore, as
the market recovery continues, a broader range of investors is
expected to recognise and act upon the attractive investment
opportunities available in Emerging Markets fixed income and
equities.
Phase two
Ashmore's objective is to diversify its business and revenue
streams over time, and the current focus is on converting the
strong equities investment performance into client flows, with
encouraging activity levels picking up through the period;
increasing alternatives AuM; and delivering growth in intermediary
retail assets as risk appetite increases.
The AuM opportunity within each initiative is substantial, with
the potential to deliver a significantly larger and more
diversified business, thereby enhancing further the Group's
resilience to market cycles.
Phase three
Ashmore has established a network of local asset management
operations across six emerging countries, from Colombia in the west
to Indonesia in the east. Collectively, they manage US$7 billion
for domestic and international institutions and intermediary retail
investors. Importantly, they provide the Group with diversification
benefits, as seen tangibly this year with stable locally managed
AuM compared with a decline for the Group's global business, and
access to significant long-term growth opportunities as each
country develops its capital markets and asset management
industry.
Each business continues to develop according to its local
strategy, with listed equities outperformance, investment
realisations and further capital raising planned in Colombia;
development of a broader product range and client diversification
in Saudi Arabia; good investment performance and growing AuM in
India; and investment outperformance and successful management of
industry regulatory changes in Indonesia.
The success of Ashmore Indonesia illustrates the near-term
development opportunity in these businesses, and the potential
value creation for Ashmore's shareholders. With the Group's
support, the management team established a highly profitable
business of more than US$2 billion AuM, with significant employee
equity ownership and a listing on the local Jakarta Stock Exchange.
The business is currently valued at more than US$150 million.
Consequently, Ashmore has significant organic growth potential
available in each of these countries and will pursue opportunities
to expand the network over time.
Established business model to manage impact of market
volatility
Ashmore has experienced many different market environments in
more than 30 years of specialist investing in Emerging Markets and,
while every cycle is different, its business model is designed to
mitigate the impact of fluctuating AuM levels on its operational
and financial performance.
The Board took the decision to increase the proportion of
profits paid to employees in variable remuneration from 22.5% to
25.0% of EBVCIT. While in absolute terms the bonus pool is 24%
lower, the higher percentage reflects the cumulative impact of
three years of mostly challenging market conditions and
consequently a significant reduction in AuM and pre-bonus profits.
The Board remains mindful of achieving an appropriate balance
between overall employee remuneration and the profits available to
shareholders, and has recommended an unchanged final ordinary
dividend this year.
Delivering strong investment performance
As described in the Market review, Emerging Markets benchmark
indices delivered good returns for the year. In fixed income,
Ashmore's value-based investment process delivered outperformance
through active management and adding positions at attractive market
levels over the past few years. Similarly, the main equities
strategies have navigated the market volatility of recent years and
delivered consistent outperformance, with a strong track record
over one, three and five years. Overall, 69% of the Group's AuM is
outperforming benchmarks over three years, a significant increase
compared with 28% a year ago.
Ashmore has a well-established pattern of exploiting cyclical
market weakness through active management embedding significant
upside value in portfolios, and the subsequent market recovery
leading to outperformance for clients. While the drivers of each
cycle are different, Ashmore's consistent approach has again
delivered a similar profile of investment performance in this
cycle.
Employees
In recent years, Ashmore's employees have experienced
significant changes in working practices, high levels of market
volatility and a period of cyclically lower AuM and profits.
Delivering performance for clients is the responsibility of all
colleagues, not just the investment professionals, and therefore on
behalf of the Board, I would like to thank each of them for their
steadfast commitment to Ashmore's purpose, their expertise and high
levels of professionalism, and maintaining the Group's highly
effective team-based culture.
Positive outlook as the market cycle turns
There is mounting evidence that the negative cycle has turned
and, while the recovery may not be a straight line, it is
well-supported by improving fundamentals across the larger emerging
countries, although notably China faces some headwinds from lower
consumer confidence after reopening its economy. Some investors
remain cautious, but client activity levels are increasing and the
combination of positive performance and attractive valuations
available across Emerging Markets should drive capital flows over
the medium term, as has occurred after previous down cycles.
Ashmore is focused on pursuing its strategic growth objectives,
while managing the business appropriately to mitigate the impact of
market conditions and competitive pressures, and to deliver upside
through operating leverage as AuM grows as a consequence of
performance and client flows.
Ashmore remains highly profitable, is delivering outperformance
for clients and has a scalable operating platform, which means it
is well-positioned to benefit from the ongoing recovery in Emerging
Markets.
Mark Coombs
Chief Executive Officer
5 September 2023
MARKET REVIEW
A stronger year in Emerging Markets
Conditions in Emerging Markets improved over the year, leading
to fixed income returns of 6% to 11% and outperformance versus
developed markets, and equities delivered a positive return of 2%.
Near-term returns are underpinned by attractive valuations and
further improvement in cyclical factors against a backdrop of
structural growth.
After a weak first quarter in common with global capital
markets, Emerging Markets rallied over the subsequent nine months
to deliver positive returns for the year overall. This reflects the
benefit of sound and effective monetary policies, lower debt levels
than developed countries, tighter sovereign and corporate spreads
over the period, and the positive impact of a weaker US dollar on
local currency returns.
The year was characterised by the continued tightening of policy
rates by central banks in response to high inflation, banking
failures in the US and Europe, and ongoing conflict or geopolitical
tension in Europe and Asia. Several important economic indicators
underpinned the rally in Emerging Markets asset prices:
- GDP growth across Emerging Markets is expected to be
significantly higher than in the developed world.
- After more than two years of tighter monetary policy,
inflation is falling in Emerging Markets and interest rates are now
higher than expected CPI inflation. The inflection point in the
rates cycle has been reached, the credibility of most central banks
is high, and monetary policy easing by Emerging Markets central
banks is possible in the foreseeable future.
- The US dollar has enjoyed a prolonged bull run, which appears
to have ended in 2022 as the weak underlying fundamentals in the US
economy, and the prospect of a recession and correction in the
equity market, put downward pressure on the currency.
The sections below present the recent performance and prospects
for each of the main fixed income and equity asset classes.
External debt
The EMBI GD delivered a positive return of 7.4% over the 12
months, and the index spread over US Treasuries tightened by 110bps
to 430bps. Although the first quarter saw a material drawdown
(-4.6%) due to high inflation and hawkish central banks, the index
delivered positive returns in each subsequent quarter. By region,
Eastern Europe, Africa and Latin America performed well, while Asia
and the Middle East lagged the index.
The HY index spread briefly exceeded 1,000bps early in the
period, which historically is a level from which substantial
positive returns are achieved over the following 12 months. Indeed,
HY assets outperformed over the 12 months with a return of 11.8%
compared with 3.4% for the IG index.
Some higher-yielding countries, such as Egypt and Sri Lanka,
face challenges, but each situation is specific to the country in
question and the path for each - in terms of avoiding default,
undertaking a credible restructuring, or remaining in limbo without
access to markets - depends as much on the domestic capacity for
reform as it does on the global macro environment. The investment
opportunity in each situation will be determined by the extent to
which the various scenarios have been priced by bond and equity
markets.
The US rate cycle is approaching its peak and the external debt
asset class is set to outperform given its still wide spread by
historical standards, a yield in excess of 8%, and substantial
diversification available in an index comprising 69 countries and
with 51% of bonds rated IG.
Local currency
The GBI-EM GD performed well with a return of 11.4% over the
year, mostly through a rally in local markets with only 1% coming
from stronger Emerging Markets currencies against the US dollar.
The asset class has benefited from the early and effective monetary
policy tightening pursued by many countries' central banks over the
past couple of years, which has delivered macro stability and
anchored inflation expectations in those countries, and also
provided a path for policy easing in the foreseeable future. The
index returns were particularly strong in Latin America and Eastern
Europe, while Asia lagged. Weaker performance in the Middle East
and Africa reflected the country-specific challenges in Egypt and
South Africa.
The outlook for the US dollar is important to investor
perceptions and performance of the local currency asset class.
After a prolonged bull run, several factors point to a period of
weakness in the US dollar, including large fiscal deficits,
imbalanced external accounts and overly expensive currency and
stocks, particularly in the context of a potential recession. For
context, the trade-weighted real value of the US dollar peaked in
2022 only 10% below the 1985 Plaza Accord level and above the level
reached around the dot-com bubble, thus representing one of the
highest levels that the currency has seen in the past 50 years. In
contrast, Emerging Markets currencies trade at attractive real
effective exchange rate valuations.
Notwithstanding the returns delivered over the past 12 months,
the local currency asset class continues to offer substantial value
with an attractive yield of more than 6%, accelerating GDP growth
and the potential for interest rate cuts in many of the 20
countries in the index if inflation continues to trend down.
Corporate debt
The CEMBI BD performed similarly to the sovereign market, with
an investment return of 5.7% over the year supported by a
tightening of spread from 400bps to 320bps. HY bonds outperformed
with a return of 9.9% compared with 2.5% for IG bonds. In terms of
regions, corporate assets performed strongly in Eastern Europe,
with returns closer to the overall index performance in Latin
America, Africa, Asia and the Middle East.
Default rates are low in Latin America, Africa and Middle East
(less than 1%) and comparable to the US market. Higher default
rates have been experienced due to policy tightening in China and
as a consequence of the war in Ukraine, but it appears that overall
default rates may have peaked in this cycle.
This asset class has characteristics that are superior to the
equivalent US credit markets and, after a repricing of assets
during the current interest rate cycle, underpin the relative value
available in Emerging Markets corporate debt. These characteristics
include:
- The index is highly diversified with more than 750 issuers
across 63 countries. More than half (58%) of the bonds in the index
are rated IG.
- Companies in Emerging Markets tend to have lower leverage
compared with US and European peers, because management teams have
a more conservative approach given the need to compensate for
higher perceived country risk. Net leverage in the IG market is
less than 1.5x EBITDA, compared with 2.5x to 3.5x in the US and
Europe. There is a similar picture in the HY market, with net
leverage of around 2x in Emerging Markets compared with 3.5x to 5x
in the US and Europe.
- Despite lower leverage, Emerging Markets IG bonds offer a
significant spread pick-up of 100bps per turn of leverage, compared
with equivalent-rated US high-grade issuers.
- Similarly, the HY index offers an attractive yield of 9.5%,
which despite the lower leverage is a point higher than the US HY
market.
The above factors, when combined with the positive outlook for
corporate earnings as a consequence of accelerating GDP growth and
a supportive technical position given subdued new issuance, mean
that the corporate debt asset class is well-positioned to deliver
further positive returns over the medium term.
Equities
The MSCI EM index rose by 1.8% over the year, with the impact of
tighter financial conditions in the first quarter and weaker than
expected Asian economic data in the final quarter holding back
returns compared with the fixed income markets. Frontier Markets
were a little weaker (MSCI Frontier -2.8%), but small cap markets
performed better, with the MSCI EM Small Cap index rising
13.3%.
After a challenging period in many countries, the outlook for
equity market performance is positive. Importantly, aggregate GDP
growth in emerging countries is expected to accelerate over the
next few years, and consequently the premium to developed world
growth will expand. Historically, there has been an understandable
correlation between the relative performance of equity markets and
economic growth differentials, which therefore provides a firm
underpin to the asset class.
Against this backdrop of accelerating economic growth, the
return opportunity in Emerging Markets equities reflects a
combination of secular growth opportunities, particularly in Asian
countries such as India and Indonesia, and other markets trading at
substantial discounts to their history and fair value, for example
in Latin America and China. Earnings growth expectations are
modest, and in this context the substantial price/earnings ratio
discount at which Emerging Markets equities trade to developed
markets (11.0x compared with 18.5x for the S&P500) appears
unjustified and supports outperformance of the asset class over the
medium term.
Outlook
The structural drivers of growth in Emerging Markets are intact
and underpinned by ongoing reforms in Asia, Latin America and
Africa together with dominance over the world's natural resources
and the supply chains necessary for energy transition. This is
reflected in the continued superior GDP growth expected when
compared with the developed world. However, this growth potential
is not reflected in current valuations, providing investors with an
opportunity to participate in the ongoing recovery in asset prices
after a challenging few years in capital markets outside the
US.
From a cyclical standpoint, there are several factors that
should explicitly support the performance of Emerging Markets:
- Inflation is falling and interest rates are peaking following
early and effective monetary policy tightening by Emerging Markets
central banks, well ahead of the Fed and other developed world
policymakers.
- China has a renewed focus on delivering economic growth and
consequently is providing significant monetary and fiscal stimulus
to its economy, which will have both a domestic impact but also a
broader positive effect on trade. Policy choices must also
recognise the need to navigate the headwinds of lower consumer
confidence and demand following the reopening of its economy.
- After a prolonged bull run, the US dollar appears to have
peaked in late 2022. Objectively, it is still overvalued, partially
as a result of significant flows into the US equity market that is
also vulnerable to a correction given its high valuation and the
potential for a recession in a lagged response to tighter financial
conditions.
With this backdrop, the near-term outlook for the main Emerging
Markets asset classes is positive.
Given the historical strong correlation, equities should benefit
from an expansion of the relative economic growth rate, and a
weaker US dollar will support returns from this asset class for
many developed world investors. Similarly, local currency bond
returns will be underpinned by the monetary easing cycle in many
countries together with dollar weakness.
IG sovereign and corporate markets offer meaningful yield
enhancement compared with the developed world, and provide a
lower-risk alternative for investors that remain concerned about
aspects of the global macro environment. At the HY end of the
market, distressed credits offer potentially significant recovery
upside as the economic cycle turns.
Given the global macro challenges of the past few years, and the
ongoing war in Europe and geopolitical tension in Asia, there is
understandably an element of risk aversion among some investors,
particularly those in the US. However, a broader set of investors
increasingly recognises the opportunities represented by the
superior growth prospects and attractive yields available across
Emerging Markets. As has been seen in previous cycles, an increase
in capital flows and investment supports economic growth in the
developing world and can therefore lead to further asset class
outperformance.
Business review
Successfully managing a cycle
Adjusted EBITDA margin of 54% reflects opening AuM below last
year's average level, mitigated by effective cost management. With
higher interest income and seed capital returns, diluted EPS is
12.2 pence, 4% lower YoY, and the balance sheet remains robust with
GBP705 million of capital resources including more than GBP450
million of cash.
Reconciling items:
--------------------------------
FY2023 Seed capital FX translation FY2023 FY2022
GBPm Reported (gains)/losses (gains)/losses Adjusted Adjusted
-------------------------------------- --------- --------------- --------------- --------- ---------
Net management fees 183.2 - - 183.2 243.5
Performance fees 5.1 - - 5.1 4.5
Other revenue 2.7 - - 2.7 2.9
Foreign exchange 5.4 - (1.0) 4.4 6.3
-------------------------------------- --------- --------------- --------------- --------- ---------
Net revenue 196.4 - (1.0) 195.4 257.2
Gains on investment securities (44.3) 44.3 - - -
Change in third-party interests in
consolidated funds 19.3 (19.3) - - -
Personnel expenses (66.2) - 0.3 (65.9) (72.3)
Other expenses excluding depreciation
and amortisation (24.6) 1.3 - (23.3) (20.6)
-------------------------------------- --------- --------------- --------------- --------- ---------
EBITDA 80.6 26.3 (0.7) 106.2 164.3
EBITDA margin 41% - - 54% 64%
Depreciation and amortisation (3.2) - - (3.2) (3.1)
-------------------------------------- --------- --------------- --------------- --------- ---------
Operating profit 77.4 26.3 (0.7) 103.0 161.2
Net finance income/(expense) 33.9 (18.0) - 15.9 1.6
Associates and joint ventures 0.5 - - 0.5 1.3
-------------------------------------- --------- --------------- --------------- --------- ---------
Profit before tax 111.8 8.3 (0.7) 119.4 164.1
-------------------------------------- --------- --------------- --------------- --------- ---------
Diluted EPS (p) 12.2 0.6 (0.1) 12.7 18.7
-------------------------------------- --------- --------------- --------------- --------- ---------
Assets under management
AuM declined by 13% over the year to US$55.9 billion, with the
movement attributable to net outflows of US$11.5 billion, offset by
positive investment performance of US$3.4 billion, delivered in
each of the six investment themes. Reflecting the opening AuM level
of US$64.0 billion, average AuM was 30% lower than in the prior
year at US$58.2 billion (FY2022: US$83.6 billion).
Gross subscriptions of US$7.2 billion represent 11% of opening
AuM, lower than in the prior year primarily as a consequence of
cautious investor sentiment reflecting concerns over the
macroeconomic backdrop in global markets (FY2022: US$13.1 billion,
14% of opening AuM).
Subscriptions were strongest in the external debt, local
currency and equities investment themes, particularly as clients
recognised that Emerging Markets central banks are ahead of their
developed world counterparts in tackling inflation, and the US
dollar appears to have peaked in 2022. External debt inflows were a
combination of existing client top-ups and continued product
development to capture the intrinsic value available in HY markets,
and there were new institutional clients in local currency and
equities.
Gross redemptions of US$18.7 billion, or 29% of opening AuM,
were lower than in the prior year (FY2022: US$26.6 billion, 28% of
opening AuM) and include US$2.3 billion of overlay/liquidity
redemptions (FY2022: US$6.0 billion), but remain relatively high as
a consequence of global macro concerns and market volatility,
particularly in the first half of the year, meaning some investors
shifted allocations in favour of traditionally perceived safe
havens. This risk aversion was particularly evident in developed
world investors, reflected in a lower proportion of AuM from
clients in the Americas and the fact that Ashmore's Emerging
Markets-domiciled clients increased from 27% to 33% of Group
AuM.
Consistent with the rally in markets from the September lows,
Ashmore's investment performance and net flow momentum improved in
the second half of the financial year. Positive investment
performance of US$2.6 billion in H2 compares with US$0.8 billion in
H1, and net outflows approximately halved from US$7.6 billion in H1
to US$3.9 billion in H2.
The total net outflow for the period of US$11.5 billion (FY2022:
US$13.5 billion net outflow) comprises a net outflow from retail
clients of US$0.7 billion (24% of opening intermediary retail AuM),
reflecting the typically shorter investment horizon, and net
redemptions from institutional clients of US$10.8 billion (18% of
opening institutional AuM).
Ashmore's local offices continued to perform well and
illustrated the benefits of diversification. Total AuM was stable
at US$7.0 billion (30 June 2022: US$6.9 billion) with only modest
net outflows of US$0.3 billion. As described in the CEO review,
these businesses have significant growth potential as they
participate in the development of independent domestic asset
management industries, and there are opportunities to expand the
network over time to enhance the strategic and financial benefits
to the Group.
AuM movements by investment theme
The development during the period of AuM by theme is shown in
the table below. The local currency investment theme includes
US$6.3 billion of overlay/liquidity funds (30 June 2022: US$7.2
billion).
AuM AuM
30 June Gross Gross 30 June
2022 subscriptions redemptions Net flows Performance 2023
Investment theme US$bn US$bn US$bn US$bn US$bn US$bn
----------------- -------- -------------- ------------ --------- ----------- --------
External debt 14.4 1.7 (5.7) (4.0) 0.6 11.0
Local currency 20.6 2.7 (6.0) (3.3) 1.5 18.8
Corporate debt 6.8 0.2 (0.6) (0.4) 0.1 6.5
Blended debt 14.4 0.7 (4.0) (3.3) 0.8 11.9
----------------- -------- -------------- ------------ --------- ----------- --------
Fixed income 56.2 5.3 (16.3) (11.0) 3.0 48.2
Equities 6.3 1.9 (2.3) (0.4) 0.3 6.2
Alternatives 1.5 - (0.1) (0.1) 0.1 1.5
----------------- -------- -------------- ------------ --------- ----------- --------
Total 64.0 7.2 (18.7) (11.5) 3.4 55.9
----------------- -------- -------------- ------------ --------- ----------- --------
The Group's AuM remain geographically diverse and broadly
consistent with recent periods, with 37% of AuM invested in Latin
America, 29% in Asia Pacific, 13% in Eastern Europe and 21% in the
Middle East and Africa.
Clients
Ashmore's clients are predominantly a diversified set of
institutions, representing 96% of AuM (30 June 2022: 95%), with the
remainder sourced through intermediary retail channels. Segregated
accounts represent 81% of AuM (30 June 2022: 81%).
Ashmore's principal mutual fund platforms are in Europe and the
US, which in total represent AuM of US$5.7 billion in 43 funds. The
European SICAV range comprises 31 funds with AuM of US$4.8 billion
(30 June 2022: US$5.4 billion in 30 funds) and the US 40-Act range
has 12 funds with AuM of US$0.9 billion (30 June 2022: US$1.0
billion in 12 funds).
Investment performance
As at 30 June 2023, 67% of AuM is outperforming over one year,
69% over three years and 49% over five years (30 June 2022: 45%,
28% and 48%, respectively).
Characteristically, as markets have started to recover from
oversold levels, Ashmore's investment processes have delivered
meaningful outperformance. In addition to the consistently strong
relative performance in local currency, IG and equities strategies,
there has been a notable improvement in some of the other, higher
yielding fixed income strategies.
Current valuations across the Emerging Markets asset classes
underpin additional recovery performance in coming periods, and the
inherent value in Ashmore's portfolios support the delivery of
further outperformance for clients.
Financial review
Revenues
Opening AuM and average AuM were 23% and 30%, respectively,
below the average AuM of the prior year, and this lower level of
AuM delivered the 25% fall in net revenue to GBP196.4 million. On
an adjusted basis, excluding FX translation effects, net revenue
fell by 24% to GBP195.4 million.
Net revenue
FY2023 FY2022
GBPm GBPm
------------------------------ ------ ------
Net management fees 183.2 243.5
Performance fees 5.1 4.5
Other revenue 2.7 2.9
FX: hedges 4.4 6.3
------------------------------ ------ ------
Adjusted net revenue 195.4 257.2
FX: balance sheet translation 1.0 5.3
------------------------------ ------ ------
Net revenue 196.4 262.5
------------------------------ ------ ------
Net management fee income declined by 25% to GBP183.2 million.
This reflects the lower average AuM and a net management fee margin
of 38bps (FY2022: 39bps), partially offset by the benefit of a
lower average GBP:US$ rate in this period. At constant FY2022
exchange rates, net management fee income reduced by 32%.
The slight decline in the net management fee margin YoY reflects
the positive effects from investment theme mix and large mandate
flows offset by the impact of market performance over the year
(stronger performance in lower margin strategies and accounts) and
competition and other mix effects.
Performance fees of GBP5.1 million (FY2022: GBP4.5 million) were
realised in the year, and delivered by a range of funds in the
local currency, blended debt and alternatives investment themes.
Approximately US$12 billion of the Group's AuM, or 21% of the
total, is eligible to earn performance fees at 30 June 2023. The
Group continues to expect its diverse sources of net management fee
income to generate the majority of its net revenues.
Translation of the Group's non-Sterling assets and liabilities,
excluding seed capital, resulted in an unrealised FX gain of GBP1.0
million (FY2022: GBP5.3 million gain). The Group's effective
hedging programme and the active management of FX exposures during
the period meant that realised and unrealised hedging gains of
GBP4.4 million were delivered (FY2022: GBP6.3 million gain).
Therefore, the Group recognised a total FX gain of GBP5.4 million
in revenues (FY2022: GBP11.6 million gain).
Other revenue of GBP2.7 million was comparable to the prior year
(FY2022: GBP2.9 million).
The table below summarises the net management fee income,
performance fee income and net management fee margin by investment
theme.
Net management Performance fees Net management
fees fee margin
----------------- ---------------- ------------------ ----------------
FY2023 FY2022 FY2023 FY2022 FY2023 FY2022
Investment theme GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ------- ------- -------- -------- ------- -------
External debt 32.5 46.7 - 2.0 31 35
Local currency 43.0 54.9 3.3 0.8 28 27
Corporate debt 16.2 26.0 - - 30 37
Blended debt 46.8 69.3 1.1 1.3 44 46
----------------- ------- ------- -------- -------- ------- -------
Fixed income 138.5 196.9 4.4 4.1 33 35
Equities 29.5 33.1 - 0.4 58 58
Alternatives 15.2 13.5 0.7 - 144 138
----------------- ------- ------- -------- -------- ------- -------
Total 183.2 243.5 5.1 4.5 38 39
----------------- ------- ------- -------- -------- ------- -------
Operating costs
Total operating costs of GBP94.0 million (FY2022: GBP98.5
million) include GBP1.3 million of expenses incurred by seeded
funds that are required to be consolidated (FY2022: GBP1.4
million), as disclosed in note 20. On an adjusted basis, taking
into account the impact of seed capital and the proportion of the
accrual for variable compensation that relates to FX translation
gains, operating costs were reduced by 4% compared with the prior
year. Adjusted operating costs fell by 7% at constant FY2022
exchange rates.
FY2023 FY2022
GBPm GBPm
------------------------------- ------ ------
Staff costs (31.4) (27.8)
Other operating costs (23.3) (20.6)
Depreciation and amortisation (3.2) (3.1)
------------------------------- ------ ------
Operating costs before VC (57.9) (51.5)
Variable compensation (VC) (34.8) (45.6)
VC accrual on FX gains/losses 0.3 1.1
------------------------------- ------ ------
Adjusted operating costs (92.4) (96.0)
Consolidated funds costs (1.3) (1.4)
Add back VC on FX gains/losses (0.3) (1.1)
------------------------------- ------ ------
Total operating costs (94.0) (98.5)
------------------------------- ------ ------
Staff costs increased by 13% to GBP31.4 million, of which nearly
half was due to the lower average GBP:US$ rate. There was also the
impact of wage inflation in certain locations and a 1% higher
average headcount. The underlying increase in staff costs was
primarily in the first half of the year, with costs in the second
half being broadly flat on the first half.
Other operating costs, excluding consolidated fund expenses and
depreciation and amortisation, increased by 13% to GBP23.3 million.
FX movements account for approximately half of the increase and the
remainder was due to the full year impact of returning towards more
normal levels of business travel and office occupancy.
Ashmore accrued charitable donations of GBP0.5 million (FY2022:
GBP0.6 million), equivalent to 0.5% of profit before tax.
Variable compensation has been accrued at 25% of EBVCIT,
resulting in a charge of GBP34.8 million. The higher proportion of
profits reflects the point in the cycle, where Ashmore is
delivering investment outperformance for clients as markets
recover, but the financial performance lags with the impact of
lower average AuM levels. In absolute terms, the charge is 24%
lower than in the prior year (FY2022: GBP45.6 million) and
consistent with the fall in adjusted net revenue.
The combined depreciation and amortisation charges for the
period of GBP3.2 million were similar to the prior year.
Adjusted EBITDA
The impact of the lower revenue base, partially mitigated by
lower operating costs, means that adjusted EBITDA declined by 35%
from GBP164.3 million to GBP106.2 million. This delivered an
adjusted EBITDA margin of 54% for the year (FY2022: 64%).
Finance income
Net finance income of GBP33.9 million (FY2022: GBP2.1 million
finance expense) includes gains relating to seed capital
investments, which are described in more detail below. Excluding
such items, net interest income for the period of GBP15.9 million
increased compared with the prior year (FY2022: GBP1.6 million) due
to the benefit of higher market interest rates on the Group's cash
deposits.
Seed capital
The following table summarises the principal IFRS items in the
accounts to assist in understanding the financial impact of the
Group's seed capital programme on profits. The seed capital
investments generated realised gains of GBP2.4 million and an
unrealised mark-to-market loss of GBP10.7 million, to give an
aggregate loss of GBP8.3 million for the year (FY2022: GBP49.9
million loss). This comprises a GBP15.3 million loss in respect of
consolidated funds (FY2022: GBP40.5 million loss) and a GBP7.0
million gain in respect of unconsolidated funds (FY2022: GBP9.4
million loss).
Impact of seed capital investments on profits
FY2023 FY2022
GBPm GBPm
------------------------------------------------------ ------ ------
Consolidated funds (note 20):
Gains/(losses) on investment securities (44.3) (61.3)
Change in third-party interests in consolidated funds 19.3 16.5
Operating costs (1.3) (1.4)
Investment income 11.0 5.7
------------------------------------------------------ ------ ------
Sub-total: consolidated funds (15.3) (40.5)
Unconsolidated funds (note 8):
Market return 5.7 (10.6)
FX 1.3 1.2
------------------------------------------------------ ------ ------
Sub-total: unconsolidated funds 7.0 (9.4)
Total seed capital profit/(loss) (8.3) (49.9)
------------------------------------------------------ ------ ------
* realised 2.4 0.1
------------------------------------------------------ ------ ------
* unrealised (10.7) (50.0)
------------------------------------------------------ ------ ------
Profit before tax
Statutory profit before tax was 6% lower at GBP111.8 million
(FY2022: GBP118.4 million) as a consequence of the decline in
adjusted EBITDA mitigated by lower losses on seed capital
investments and the benefit of higher interest rates on finance
income.
Taxation
The effective tax rate of 22.6% (FY2022: 22.4%) is slightly
higher than the blended UK corporation tax rate of 20.5% for the
year (FY2022: 19.0%) due to the geographic mix of the Group's
profits in the period, the valuation of deferred tax assets
relating to share-based remuneration and the impact of seed capital
gains and losses. Note 12 to the financial statements provides a
full reconciliation of this difference compared with the UK
corporation tax rate.
The Group's current effective tax rate, based on its geographic
mix of profits and prevailing tax rates, is approximately 19% to
20%.
Earnings per share
Basic EPS for the period fell by 7% to 12.4 pence (FY2022: 13.4
pence) and diluted EPS declined by 4% from 12.6 pence to 12.2
pence.
On an adjusted basis, excluding the effects of FX translation,
seed capital-related items and relevant tax, diluted EPS was 32%
lower at 12.7 pence (FY2022: 18.7 pence).
Balance sheet
Ashmore's consistent approach is to maintain a strong and liquid
balance sheet over market cycles, enabling it to support the
commercial demands of current and prospective investors, and to
take advantage of strategic development opportunities.
As at 30 June 2023, total equity attributable to shareholders of
the parent was GBP898.8 million (30 June 2022: GBP945.0 million).
The Group has no debt.
The level of capital required to support the Group's activities,
including its regulatory requirements, is GBP80.6 million. As at 30
June 2023, the Group had total capital resources of GBP704.8
million, equivalent to 99 pence per share, and therefore
representing an excess of GBP624.2 million over the Board's level
of required capital.
Cash
Ashmore's business model delivers a high conversion rate of
operating profits to cash. Based on operating profit of GBP77.4
million for the period (FY2022: GBP119.2 million), the Group
generated GBP111.6 million of cash from operations (FY2022:
GBP182.1 million). The operating cash flows after excluding
consolidated funds represent 105% of adjusted EBITDA (FY2022:
113%).
Cash and cash equivalents by currency
30 June 30 June
2023 2022
GBPm GBPm
---------- ------- -------
Sterling 374.0 273.1
US dollar 71.1 247.9
Other 33.5 31.0
---------- ------- -------
Total 478.6 552.0
---------- ------- -------
Excluding cash held in consolidated funds, the Group's cash and
cash equivalents reduced by GBP73.7 million to GBP468.3 million (30
June 2022: GBP542.0 million), principally due to new seed capital
investments. There was an increase in the proportion of cash held
in Sterling following the sale of US dollars for Sterling at
attractive levels in the first half of the year.
Seed capital investments
The Group's seed capital programme has delivered growth in
third-party AuM with approximately US$6 billion of AuM in funds
that have been seeded, representing 11% of total Group AuM.
During the year, the Group made new investments of GBP63.9
million and profitably realised GBP24.6 million from previous
investments. The unrealised mark-to-market loss on the portfolio
was GBP19.8 million, meaning that the market value of the Group's
seed capital investments increased to GBP291.5 million (30 June
2022: GBP272.0 million).
Subscriptions in the period were focused on developing new funds
in the external debt, local currency and equities themes, including
providing access to the Group's local asset management
capabilities.
The ability to redeem seed capital was facilitated by successful
realisations by funds in the alternatives theme, particularly in
respect of infrastructure-related investments in Latin America, and
matching client flows into equity funds managed locally in Saudi
Arabia.
The mark-to-market reduction in value was due to changes in
asset valuations in alternatives funds, predominantly in the first
half of the year, with positive returns delivered by funds in the
fixed income and equities themes.
The diversified mix of seed capital investments means that the
underlying fund portfolios, some of which are consolidated under
IFRS 10, have exposure to a range of Emerging Markets asset
classes, including sovereign and corporate fixed income, listed
equities, private equity, real estate and infrastructure, and a
wide array of industries including education, energy, financials,
healthcare, industrials, basic materials, transport and
utilities.
Ashmore has integrated the consideration of ESG factors into its
investment processes, which therefore means the Group's seed
capital investments are in funds that are scored in accordance with
Ashmore's proprietary ESG methodology and may contribute to
Ashmore's involvement in industry initiatives such as Climate
Action 100+, NZAMI and UN PRI.
Seed capital market value by currency
30 June 30 June
2023 2022
GBPm GBPm
------------------- ------- -------
US dollar 240.1 222.4
Colombian peso 19.7 19.0
Other 31.7 30.6
------------------- ------- -------
Total market value 291.5 272.0
------------------- ------- -------
As at 30 June 2023, two-thirds of the Group's seed capital is
held in funds with at least monthly dealing frequency, such as
SICAV or US 40-Act mutual funds. Ashmore has also made seed capital
commitments to funds of GBP8.9 million that were undrawn at the
period end, giving a total value for the Group's seed capital
programme of approximately GBP300 million.
Goodwill and intangible assets
At 30 June 2023, goodwill and intangible assets on the Group's
balance sheet totalled GBP86.9 million (30 June 2022: GBP90.9
million). The movement in the period is primarily the result of an
FX revaluation loss in reserves of GBP3.9 million (FY2022: GBP10.5
million gain).
Shares held by EBT
The EBT purchased GBP15.6 million of ordinary shares during the
period in anticipation of the vesting of employee share awards.
Consequently, at 30 June 2023, the EBT owned 50,834,683 ordinary
shares (30 June 2022: 55,512,301 ordinary shares), representing
7.1% of the Group's issued share capital (30 June 2022: 7.8%).
Foreign exchange
The majority of the Group's fee income is received in US dollars
and it is the Group's policy to hedge up to two-thirds of the
notional value of budgeted foreign currency-denominated net
management fees. Foreign currency assets and liabilities, including
cash, are marked to market at the period end exchange rate with
movements reported in either revenues or OCI.
Movements in the GBP:US$ and other exchange rates over the
period increased net management fees by 7%, increased operating
costs by 3%, and resulted in a translation gain in net revenue of
GBP1.0 million on the Group's foreign currency assets and
liabilities and a GBP1.3 million mark-to-market gain on the Group's
seed capital investments.
Included in OCI is an unrealised FX translation loss on
non-Sterling assets and liabilities of GBP26.2 million (FY2022:
GBP80.2 million gain), which, in addition to the goodwill movement
described above, mainly comprises GBP11.5 million on the value of
seed capital investments and GBP7.6 million on the Group's cash
balances.
Dividend
The Board's policy is 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.
The Board recognises the importance of the ordinary dividend to
shareholders and, taking into consideration the profit for the
year, the substantial cash flows delivered, the strength of the
balance sheet, the positive near-term outlook as described in the
CEO review and the substantial medium-term growth opportunities
available to Ashmore, it has recommended a final dividend of 12.1
pence per share.
If approved by shareholders, the dividend will be paid on 8
December 2023 to all shareholders on the register on 3 November
2023.
Tom Shippey
Group Finance Director
5 September 2023
RISK MANAGEMENT
In accordance with the Code, the Board is ultimately responsible
for the Group's risk management and internal control systems and
for reviewing their effectiveness. Such systems and their review
are designed to manage, rather than eliminate, the risk of failure
to achieve business objectives, and can provide only reasonable and
not absolute assurance against material misstatement or loss.
Principal and emerging risks, controls and mitigants
The table below summarises those principal risks that the Group
has assessed as being most significant currently, together with
examples of associated controls and mitigants. Reputational and
conduct risks are common to most aspects of Ashmore's strategy and
business model.
Ashmore's internal control framework considers the assessment
and management of emerging risks alongside its principal risks,
current examples of which are:
- the impact of inflation;
- geopolitical and sanctions risks; and
- ESG risks including regulatory and industry focus on potential
greenwashing, legal uncertainty and litigation risks arising from
the industry's differing interpretation of ESG regulation, and the
impact of ESG factors on investors' decisions to invest in Emerging
Markets.
Principal risks and associated controls and mitigants
Description of principal Examples of associated controls and mitigants
risks
------------------------------------------- ------------------------------------------------------------
Strategic and business risks (Responsibility: Board of Directors)
-----------------------------------------------------------------------------------------------------------
Long-term downturn in Emerging
Markets fundamentals/technicals/sentiment, * Group strategy is reviewed and approved by a Board
and impact of broader industry with relevant industry experience
changes (including ESG) on
Ashmore's strategy and business
model * Diversification of investment capabilities and
products
* Ashmore has a strong balance sheet with no debt
* ESG and specialised committees meet regularly
* The Board reviews diversity data on an annual basis
------------------------------------------- ------------------------------------------------------------
Market capacity issues and
increased competition constrain * Experienced Emerging Markets investment professionals
growth with deep market knowledge
* Periodic investment theme capacity reviews
* Emerging Markets asset classes continue to grow,
increasing the size of Ashmore's investable universe
------------------------------------------- ------------------------------------------------------------
Failure to understand and
plan for the potential impact * Oversight by ESGC, which covers corporate and
of investor sentiment, climate investment activities, and scoring of all issuers for
change and sustainability E, S and G factors
regulations on product preferences
and underlying asset prices
(including effects of transition * Head of Responsible Investment and ESG Policy
to a low-carbon economy) provides updates to the Board
* NZAMI membership and participation in industry
working groups to prepare for net zero commitments
------------------------------------------- ------------------------------------------------------------
Client risks (Responsibility: Product Committee and RCC)
-----------------------------------------------------------------------------------------------------------
Inappropriate marketing or
ESG strategy and/or ineffective * Regular Product Committee meetings review product
management of existing and suitability and appropriateness
potential fund investors
and distributors, including
impact of net outflows and * Experienced distribution team with appropriate
fee margin pressure geographic coverage
* Investor education to ensure understanding of Ashmore
investment themes and products
* ESGC includes distribution team members
------------------------------------------- ------------------------------------------------------------
Inadequate client oversight
including alignment of interests * Global distribution team appropriately structured for
institutional and intermediary retail clients
* Monitoring of client-related issues including a
formal complaints handling process
* Compliance and legal oversight to ensure clear and
fair terms of business and disclosures, and
appropriate client communications and financial
promotions
------------------------------------------- ------------------------------------------------------------
Treasury risks (Responsibility: CEO and GFD)
-----------------------------------------------------------------------------------------------------------
Inaccurate financial projections
and hedging of future cash * Defined risk appetite, and risk appetite measures
flows and balance sheet updated quarterly
* Group FX hedging policy and FX and Liquidity
Management Committee
------------------------------------------- ------------------------------------------------------------
Investment risks (Responsibility: Group ICs)
-----------------------------------------------------------------------------------------------------------
Downturn in long-term performance
* Consistent investment philosophy over nearly 30 years
and numerous market cycles, with dedicated Emerging
Markets focus including country visits and network of
local offices
------------------------------------------- ------------------------------------------------------------
Operational risks (Responsibility:
RCC)
------------------------------------ -------------------------------------------------------------
Inadequate security of information
including cyber security and * Information security and data protection policies,
data protection subject to annual review including cyber security
review
* Cyber Security Working Group meets quarterly
* Employees receive online training
------------------------------------ -------------------------------------------------------------
Failure of IT infrastructure,
including inability to support * Appropriate IT policies with annual review cycle
business growth
* IT systems and environmental monitoring
* Group IT platform incorporates local offices
------------------------------------ -------------------------------------------------------------
Legal action, fraud or breach
of contract perpetrated against * Independent Internal Audit function that considers
the Group, its funds or investments risk of fraud in each audit
* Anti-money laundering and anti-bribery and corruption
policies, also required for service providers
* Whistleblowing policy including independent reporting
line and Board sponsor
* Due diligence on all new, and regular reviews of
existing, service providers
* Insurance policies in place with appropriate cover
------------------------------------ -------------------------------------------------------------
Insufficient resources, including
loss of key employees, inability * Committee-based investment management reduces key man
to attract employees, and risk
impact of remote working,
which hampers growth or the
Group's ability to execute * Appropriate Remuneration policy with emphasis on
its strategy performance-related pay and long-dated deferral of
equity awards
* Regular reviews of resource requirements and updates
provided to the Board
* Annual review of remuneration and benefits including
benchmarking against industry
* Annual Culture and Conduct report to the Board
------------------------------------ -------------------------------------------------------------
Lack of understanding and
compliance with global and * Regulatory Development Steering Group and compliance
local regulatory requirements, monitoring programme, which covers financial crime
as well as conflicts of interest risks such as money laundering and bribery
and not treating customers
fairly, and financial crime,
which includes money laundering, * Compliance policies covering global and local offices,
bribery and corruption, leading for example global conflicts of interest and
to high level publicity or inducements policies
regulatory sanction
* Anti-money laundering and anti-bribery and corruption
policies
* Conduct risk and organisational culture indicators
are considered on a monthly basis by the RCC and on a
semi-annual basis by the Board
* ESGC has oversight of regulatory and reporting
requirements
* Compliance function manages sanctions restrictions
------------------------------------ -------------------------------------------------------------
Inadequate oversight of Ashmore
overseas offices * GFD has oversight responsibility for overseas offices,
and RCC has oversight of the operating model with
annual reviews. Senior employees take local
board/advisory positions
* Dual reporting lines into local management and Group
department heads, with adherence to Group policies
* Local risk and compliance committees held and RCC
receives updates
* Internal Audit reviews, and annual governance reviews
reported to RCC
------------------------------------ -------------------------------------------------------------
Inappropriate oversight of
market, liquidity, credit, * Group risk management policies, reviewed regularly
counterparty and operational
risks
* Monthly reviews of market and liquidity risk
* Quarterly reviews of principal risks, counterparties
and credit risk
------------------------------------ -------------------------------------------------------------
Consolidated statement of comprehensive income
For the year ended 30 June 2023
2023 2022
Notes GBPm GBPm
------------------------------------------------------ ----- ------ ------
Management fees 185.4 247.0
Performance fees 5.1 4.5
Other revenue 2.7 2.9
------------------------------------------------------ ----- ------ ------
Total revenue 193.2 254.4
Distribution costs (2.2) (3.5)
Foreign exchange 7 5.4 11.6
------------------------------------------------------ ----- ------ ------
Net revenue 196.4 262.5
Losses on investment securities 20 (44.3) (61.3)
Change in third-party interests in consolidated
funds 20 19.3 16.5
Personnel expenses 9 (66.2) (73.4)
Other expenses 11 (27.8) (25.1)
------------------------------------------------------ ----- ------ ------
Operating profit 77.4 119.2
Finance income/(expense) 8 33.9 (2.1)
Share of profit from associates 26 0.5 1.3
------------------------------------------------------ ----- ------ ------
Profit before tax 111.8 118.4
Tax expense 12 (25.3) (26.5)
------------------------------------------------------ ----- ------ ------
Profit for the year 86.5 91.9
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 (26.2) 80.2
Cash flow hedge intrinsic value gains/(losses) 4.9 (6.0)
------------------------------------------------------ ----- ------ ------
Other comprehensive income/(loss), net of tax (21.3) 74.2
------------------------------------------------------ ----- ------ ------
Total comprehensive income for the year 65.2 166.1
------------------------------------------------------ ----- ------ ------
Profit attributable to:
Equity holders of the parent 83.3 88.5
Non-controlling interests 3.2 3.4
------------------------------------------------------ ----- ------ ------
Profit for the year 86.5 91.9
------------------------------------------------------ ----- ------ ------
Total comprehensive income attributable to:
Equity holders of the parent 62.7 161.9
Non-controlling interests 2.5 4.2
------------------------------------------------------ ----- ------ ------
Total comprehensive income for the year 65.2 166.1
------------------------------------------------------ ----- ------ ------
Earnings per share
Basic 13 12.43p 13.42p
Diluted 13 12.15p 12.61p
------------------------------------------------------ ----- ------ ------
Consolidated balance sheet
As at 30 June 2023
2023 2022
Notes GBPm GBPm
------------------------------------------------------ ------ ------- -------
Assets
Non-current assets
Goodwill and intangible assets 15 86.9 90.9
Property, plant and equipment 16 6.5 9.1
Investment in associates 26 2.3 2.1
Non-current financial assets measured at fair value 19, 20 54.1 39.3
Deferred acquisition costs 0.3 0.4
Deferred tax assets 18 23.9 32.7
------------------------------------------------------ ------ ------- -------
174.0 174.5
------------------------------------------------------ ------ ------- -------
Current assets
Investment securities 19, 20 229.9 265.1
Financial assets measured at fair value 19, 20 55.8 32.3
Trade and other receivables 17 70.4 74.3
Cash and cash equivalents 478.6 552.0
------------------------------------------------------ ------ ------- -------
834.7 923.7
------------------------------------------------------ ------ ------- -------
Total assets 1,008.7 1,098.2
------------------------------------------------------ ------ ------- -------
Equity and liabilities
Capital and reserves - attributable to equity holders
of the parent
Issued capital 22 0.1 0.1
Share premium 15.6 15.6
Retained earnings 875.4 901.0
Foreign exchange reserve 7.7 33.2
Cash flow hedging reserve - (4.9)
------------------------------------------------------ ------ ------- -------
898.8 945.0
Non-controlling interests 31 14.2 21.8
------------------------------------------------------ ------ ------- -------
Total equity 913.0 966.8
------------------------------------------------------ ------ ------- -------
Liabilities
Non-current liabilities
Lease liabilities 16 3.7 5.8
Deferred tax liabilities 18 9.3 8.8
------------------------------------------------------ ------ ------- -------
13.0 14.6
------------------------------------------------------ ------ ------- -------
Current liabilities
Lease liabilities 16 2.1 2.2
Derivative financial instruments 19, 21 0.2 5.2
Third-party interests in consolidated funds 19, 20 56.2 73.0
Trade and other payables 24 24.2 36.4
------------------------------------------------------ ------ ------- -------
82.7 116.8
------------------------------------------------------ ------ ------- -------
Total liabilities 95.7 131.4
------------------------------------------------------ ------ ------- -------
Total equity and liabilities 1,008.7 1,098.2
------------------------------------------------------ ------ ------- -------
Approved by the Board on 5 September 2023 and signed on its
behalf by:
Mark Coombs Tom Shippey
Chief Executive Group Finance
Officer Director
Consolidated statement of changes in equity
For the year ended 30 June 2023
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
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Balance at 30 June 2021 0.1 15.6 941.0 (46.2) 1.1 911.6 21.1 932.7
Profit for the year - - 88.5 - - 88.5 3.4 91.9
Other comprehensive
income/(loss):
Foreign currency translation
differences
arising on foreign
operations - - - 79.4 - 79.4 0.8 80.2
Cash flow hedge intrinsic
value
losses - - - - (6.0) (6.0) - (6.0)
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Total comprehensive
income/(loss) - - 88.5 79.4 (6.0) 161.9 4.2 166.1
Transactions with owners:
Purchase of own shares - - (34.5) - - (34.5) - (34.5)
Share-based payments - - 24.5 - - 24.5 - 24.5
Decrease in non-controlling
interests - - - - - - (0.5) (0.5)
Dividends to equity holders - - (118.5) - - (118.5) - (118.5)
Dividends to non-controlling
interests - - - - - - (3.0) (3.0)
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Total contributions and
distributions - - (128.5) - - (128.5) (3.5) (132.0)
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Balance at 30 June 2022 0.1 15.6 901.0 33.2 (4.9) 945.0 21.8 966.8
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Profit for the year - - 83.3 - - 83.3 3.2 86.5
Other comprehensive
income/(loss):
Foreign currency translation
differences
arising on foreign
operations - - - (25.5) - (25.5) (0.7) (26.2)
Cash flow hedge intrinsic
value
gains - - - - 4.9 4.9 - 4.9
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Total comprehensive
income/(loss) - - 83.3 (25.5) 4.9 62.7 2.5 65.2
Transactions with owners:
Purchase of own shares - - (15.6) - - (15.6) - (15.6)
Share-based payments - - 18.5 - - 18.5 - 18.5
Movements in non-controlling
interests - - 6.6 - - 6.6 (6.8) (0.2)
Dividends to equity holders - - (118.4) - - (118.4) - (118.4)
Dividends to non-controlling
interests - - - - - - (3.3) (3.3)
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Total contributions and
distributions - - (108.9) - - (108.9) (10.1) (119.0)
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Balance at 30 June 2023 0.1 15.6 875.4 7.7 - 898.8 14.2 913.0
------------------------------- -------- -------- --------- --------- -------- ------- --------------- -------
Consolidated cash flow statement
For the year ended 30 June 2023
2023 2022
GBPm GBPm
-------------------------------------------------------------- -------- --------
Operating activities
Profit for the year 86.5 91.9
Adjustments for non-cash items:
Depreciation and amortisation 3.2 3.1
Share-based payments 18.9 24.3
Foreign exchange gains (5.4) (11.6)
Net losses on investment securities 25.0 44.8
Finance (income)/expense (33.9) 2.1
Tax expense 25.3 26.5
Share of profits from associates (0.5) (1.3)
-------------------------------------------------------------- -------- --------
Cash generated from operations before working capital changes 119.1 179.8
Changes in working capital:
Decrease in trade and other receivables 9.7 4.9
Decrease/(increase) in derivative financial instruments (5.0) 6.5
Decrease in trade and other payables (12.2) (9.1)
-------------------------------------------------------------- -------- --------
Cash generated from operations 111.6 182.1
Taxes paid (7.1) (24.7)
-------------------------------------------------------------- -------- --------
Net cash generated from operating activities 104.5 157.4
-------------------------------------------------------------- -------- --------
Investing activities
Interest and investment income received 31.2 8.1
Purchase of non-current financial assets measured at fair
value (19.5) (1.9)
Purchase of financial assets measured at fair value (23.0) (5.5)
Sale of investment securities 3.2 24.2
Sale of non-current financial assets measured at fair value 5.0 1.5
Sale of financial assets held for sale - 0.1
Sale of financial assets measured at fair value - 44.0
Net cash on initial consolidation of seed capital investments (1.7) 0.3
Purchase of property, plant and equipment (0.4) (0.5)
-------------------------------------------------------------- -------- --------
Net cash generated from/(used in) investing activities (5.2) 70.3
-------------------------------------------------------------- -------- --------
Financing activities
Dividends paid to equity holders (118.4) (118.5)
Dividends paid to non-controlling interests (3.3) (3.0)
Third-party subscriptions into consolidated funds 2.8 0.5
Third-party redemptions from consolidated funds (29.1) (4.2)
Distributions paid by consolidated funds (4.2) (10.7)
Decrease in non-controlling interests (0.4) (0.5)
Payment of lease liabilities (2.2) (2.0)
Interest paid (0.3) (0.4)
Purchase of own shares (15.6) (34.5)
-------------------------------------------------------------- -------- --------
Net cash used in financing activities (170.7) (173.3)
-------------------------------------------------------------- -------- --------
Net increase/(decrease) in cash and cash equivalents (71.4) 54.4
Cash and cash equivalents at beginning of year 552.0 456.1
Effect of exchange rate changes on cash and cash equivalents (2.0) 41.5
-------------------------------------------------------------- -------- --------
Cash and cash equivalents at end of year 478.6 552.0
-------------------------------------------------------------- -------- --------
Cash and cash equivalents at end of year comprise:
Cash at bank and in hand 40.9 57.4
Daily dealing liquidity funds 56.8 225.7
Deposits 380.9 268.9
-------------------------------------------------------------- -------- --------
478.6 552.0
-------------------------------------------------------------- -------- --------
Company balance sheet
As at 30 June 2023
2023 2022
Notes GBPm GBPm
--------------------------------------------------- ----- ----- -----
Assets
Non-current assets
Goodwill 15 4.1 4.1
Property, plant and equipment 16 4.1 5.5
Investment in subsidiaries 25 19.9 19.9
Deferred acquisition costs 0.3 0.4
Trade and other receivables 17 167.8 132.0
Deferred tax assets 18 11.6 18.2
--------------------------------------------------- ----- ----- -----
207.8 180.1
--------------------------------------------------- ----- ----- -----
Current assets
Trade and other receivables 17 116.6 324.9
Derivative financial instruments 21 0.2 -
Cash and cash equivalents 327.7 159.7
--------------------------------------------------- ----- ----- -----
444.5 484.6
--------------------------------------------------- ----- ----- -----
Total assets 652.3 664.7
--------------------------------------------------- ----- ----- -----
Equity and liabilities
Capital and reserves
Issued capital 22 0.1 0.1
Share premium 15.6 15.6
Retained earnings 605.2 600.6
Cash flow hedging reserve - (4.9)
--------------------------------------------------- ----- ----- -----
Total equity attributable to equity holders of the
Company 620.9 611.4
--------------------------------------------------- ----- ----- -----
Liabilities
Non-current liabilities
Lease liability 16 2.2 3.3
Current liabilities
Lease liability 16 1.2 1.3
Derivative financial instruments 21 - 5.2
Trade and other payables 24 28.0 43.5
--------------------------------------------------- ----- ----- -----
29.2 50.0
--------------------------------------------------- ----- ----- -----
Total liabilities 31.4 53.3
--------------------------------------------------- ----- ----- -----
Total equity and liabilities 652.3 664.7
--------------------------------------------------- ----- ----- -----
The Company has taken the exemption under section 408 of the
Companies Act 2006 not to present its profit and loss account and
related notes. The Company's profit for the year ended 30 June 2023
was GBP120.1 million (30 June 2022: GBP188.6 million).
The financial statements of Ashmore Group plc (registered number
03675683) were approved by the Board on 5 September 2023 and signed
on its behalf by:
Mark Coombs Tom Shippey
Chief Executive Group Finance
Officer Director
Company statement of changes in equity
For the year ended 30 June 2023
Total
equity
attributable
to equity
Cash flow holders
Issued Share Retained hedging of the
capital premium earnings reserve parent
GBPm GBPm GBPm GBPm GBPm
--------------------------------------- -------- -------- --------- --------- -------------
Balance at 30 June 2021 0.1 15.6 540.6 1.1 557.4
Profit for the year - - 188.6 - 188.6
Cash flow hedge intrinsic value losses - - - (6.0) (6.0)
Purchase of own shares - - (34.1) - (34.1)
Share-based payments - - 24.0 - 24.0
Dividends to equity holders - - (118.5) - (118.5)
--------------------------------------- -------- -------- --------- --------- -------------
Balance at 30 June 2022 0.1 15.6 600.6 (4.9) 611.4
--------------------------------------- -------- -------- --------- --------- -------------
Profit for the year - - 120.1 - 120.1
Cash flow hedge intrinsic value gains - - - 4.9 4.9
Purchase of own shares - - (15.6) - (15.6)
Share-based payments - - 18.5 - 18.5
Dividends to equity holders - - (118.4) - (118.4)
--------------------------------------- -------- -------- --------- --------- -------------
Balance at 30 June 2023 0.1 15.6 605.2 - 620.9
--------------------------------------- -------- -------- --------- --------- -------------
Company cash flow statement
For the year ended 30 June 2023
2023 2022
GBPm GBPm
------------------------------------------------------------- ------- -------
Operating activities
Profit for the year 120.1 188.6
Adjustments for:
Depreciation and amortisation 1.8 1.8
Share-based payments 13.7 19.3
Foreign exchange losses/(gains) 9.6 (58.4)
Finance income (10.0) (0.4)
Tax expense 9.8 26.0
Dividends received from subsidiaries (145.2) (174.0)
------------------------------------------------------------- ------- -------
Cash generated from/(used in) operations before working
capital changes (0.2) 2.9
Changes in working capital:
Decrease/(increase) in trade and other receivables 57.8 (73.8)
Decrease/(increase) in derivative financial instruments (5.4) 6.5
Decrease in trade and other payables (15.5) (59.0)
------------------------------------------------------------- ------- -------
Cash generated from/(used in) operations 36.7 (123.4)
Taxes paid (6.3) (12.1)
------------------------------------------------------------- ------- -------
Net cash generated from/(used in) operating activities 30.4 (135.5)
------------------------------------------------------------- ------- -------
Investing activities
Interest received 8.9 0.2
Loans advanced to subsidiaries (27.3) (0.2)
Loans repaid by subsidiaries 137.8 184.0
Dividends received from subsidiaries 145.2 174.0
Purchase of property, plant and equipment (0.3) (0.4)
------------------------------------------------------------- ------- -------
Net cash generated from investing activities 264.3 357.6
------------------------------------------------------------- ------- -------
Financing activities
Dividends paid (118.4) (118.5)
Payment of lease liability (1.2) (1.1)
Interest paid (0.1) (0.2)
Purchase of own shares (15.6) (34.1)
------------------------------------------------------------- ------- -------
Net cash used in financing activities (135.3) (153.9)
------------------------------------------------------------- ------- -------
Net increase in cash and cash equivalents 159.4 68.2
Cash and cash equivalents at beginning of year 159.7 86.1
Effect of exchange rate changes on cash and cash equivalents 8.6 5.4
------------------------------------------------------------- ------- -------
Cash and cash equivalents at end of year 327.7 159.7
------------------------------------------------------------- ------- -------
Cash and cash equivalents at end of year comprise:
Cash at bank and in hand 2.9 6.3
Daily dealing liquidity funds 0.8 1.9
Deposits 324.0 151.5
------------------------------------------------------------- ------- -------
327.7 159.7
------------------------------------------------------------- ------- -------
Notes to the financial statements
1) General information
Ashmore Group plc (the Company) is a public limited company
listed on the London Stock Exchange and incorporated and domiciled
in the United Kingdom. The consolidated financial statements of the
Company and its subsidiaries (together the Group) for the year
ended 30 June 2023 were authorised for issue by the Board of
Directors on 5 September 2023. The principal activity of the Group
is described in the Directors' report.
2) Basis of preparation
The Group and Company financial statements for the year ended 30
June 2023 have been prepared in accordance with UK-adopted
international accounting standards.
The financial statements have been prepared on a going concern
basis under the historical cost convention, except for the
measurement at fair value of derivative financial instruments and
financial assets and liabilities that are held at fair value
through profit or loss.
The Company has taken advantage of the exemption in section 408
of the Companies Act 2006 that allows it not to present its
individual statement of comprehensive income and related notes.
Going concern
The Board of Directors has considered the resilience of the
Group, taking into account its current financial position, and the
principal and emerging risks facing the business in the context of
the current economic outlook. The Board reviewed cash flow
forecasts for a period of 12 months from the date of approval of
these financial statements which indicate that the Group will have
sufficient funds to meet its liabilities as they fall due for that
period. The Board applied stressed scenarios, including severe but
plausible downside assumptions on AuM, profitability of the Group
and known commitments. While there are wider market uncertainties
that may impact the Group, the stressed scenarios, which assumed a
significant reduction in revenue for the entire forecast period,
show that the Group and Company would continue to operate
profitably and meet their liabilities as they fall due for a period
of at least 12 months from the date of approval of the annual
financial statements. The financial statements have therefore been
prepared on a going concern basis.
Principal estimates and judgements
The preparation of the financial statements in conformity with
UK-adopted international accounting standards requires the use of
certain accounting estimates, and management to exercise its
judgement in the process of applying the Group's accounting
policies. The estimates and judgements used in preparing the
financial statements are periodically evaluated and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
There are areas of the financial statements where the use of
estimation is important, but where the risk of material adjustment
is not significant, including the assessment of performance
conditions attached to certain executive share awards (note 10),
assumptions used in the valuation of level 3 seed capital
investments (note 19) and deferred tax assets (note 18). The areas
where judgements are made include the impairment review of goodwill
(note 15), the calculation of lease assets and liabilities (note
16) and consolidation of seed capital investments (note 20).
3) New Standards and Interpretations not yet adopted
There were no Standards or Interpretations that were in issue
and required to be adopted by the Group as at the date of
authorisation of these consolidated financial statements. No other
Standards or Interpretations have been issued that are expected to
have a material impact on the Group's financial statements.
4) Significant accounting policies
The following principal accounting policies have been applied
consistently where applicable to all years presented in dealing
with items considered material in relation to the Group and Company
financial statements, unless otherwise stated.
Basis of consolidation
The consolidated financial statements of the Group comprise the
financial statements of the Company and its subsidiaries,
associates and joint ventures. This includes an Employee Benefit
Trust (EBT) established for the employee share-based awards and
consolidated investment funds.
Interests in subsidiaries
Subsidiaries are entities, including investment funds, over
which the Group has control as defined by IFRS 10. The Group has
control if it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect
those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until
the date when control ceases. The Group reassesses whether or not
it controls an entity if facts and circumstances indicate that
there are changes to one or more of the elements of control.
The profit or loss and each component of other comprehensive
income are attributed to the equity holders of the Company and to
any non-controlling interests. Based on their nature, the interests
of third parties in consolidated funds are classified as
liabilities and appear as 'Third-party interests in consolidated
funds' on the Group's balance sheet.
Associates and joint ventures are presented as single-line items
in the statement of comprehensive income and balance sheet.
Intercompany transactions and balances are eliminated on
consolidation. Consistent accounting policies have been applied
across the Group in the preparation of the consolidated financial
statements as at 30 June 2023.
A change in the ownership interest of a consolidated entity that
does not result in a loss of control by the Group is accounted for
as an equity transaction. If the Group loses control over a
consolidated entity, it derecognises the related assets, goodwill,
liabilities, non-controlling interest and other components of
equity, and any gain or loss is recognised in consolidated
comprehensive income. Any investment retained is recognised at its
fair value at the date of loss of control.
Interests in associates and joint arrangements
Associates are partly owned entities over which the Group has
significant influence but no control. Joint ventures are entities
through which the Group and other parties undertake an economic
activity which is subject to joint control.
Investments in associates and interests in joint ventures are
measured using the equity method of accounting. Under this method,
the investments are initially recognised at cost, including
attributable goodwill, and are adjusted thereafter for the
post-acquisition changes in the Group's share of net assets. The
Group's share of post-acquisition profit or loss is recognised in
the statement of comprehensive income. Where the Group's financial
year is not coterminous with those of its associates or joint
ventures, unaudited interim financial information is used after
appropriate adjustments have been made.
Interests in consolidated structured entities
The Group acts as fund manager to investment funds that are
considered to be structured entities. Structured entities are
entities that have been designed so that voting or similar rights
are not the dominant factor in deciding which party has control:
for example, when any voting rights relate to administrative tasks
only and the relevant activities of the entity are directed by
means of contractual arrangements. The Group's assets under
management are managed within structured entities. These structured
entities typically consist of unitised vehicles such as Société
d'Investissement à Capital Variable (SICAVs), limited partnerships,
unit trusts and open-ended and closed-ended vehicles which entitle
third-party investors to a percentage of the vehicle's net asset
value.
The Group has interests in structured entities as a result of
the management of assets on behalf of its clients. Where the Group
holds a direct interest in a closed-ended fund, private equity fund
or open-ended pooled fund such as a SICAV, the interest is
accounted for either as a consolidated structured entity or as a
financial asset, depending on whether the Group has control over
the fund or not. Control is determined in accordance with IFRS 10,
based on an assessment of the level of power and aggregate economic
interest that the Group has over the fund, relative to third-party
investors. Power is normally conveyed to the Group through the
existence of an investment management agreement and/or other
contractual arrangements. Aggregate economic interest is a measure
of the Group's exposure to variable returns in the fund through a
combination of direct interest, expected share of performance fees,
expected management fees, fair value gains or losses, and
distributions receivable from the fund. The Group concludes that it
acts as a principal when the power it has over the fund is deemed
to be exercised for self-benefit, considering the level of
aggregate economic exposure in the fund and the assessed strength
of third-party investors' kick-out rights. The Group concludes that
it acts as an agent when the power it has over the fund is deemed
to be exercised for the benefit of third-party investors.
If the Group concludes that it acts as a principal, it is deemed
to have control and, therefore, will consolidate a fund as if it
were a subsidiary. If the Group concludes that it does not have
control over the fund, the Group recognises and measures its
interest in the fund as a financial asset.
Interests in unconsolidated structured entities
The Group classifies the following investment funds as
unconsolidated structured entities:
- Segregated mandates and pooled funds managed where the Group
does not hold any direct interest. In this case, the Group
considers that its aggregate economic exposure is insignificant
and, in relation to segregated mandates, the third-party investor
has the practical ability to remove the Group from acting as fund
manager, without cause. As a result, the Group concludes that it
acts as an agent for third-party investors.
- Pooled funds managed by the Group where the Group holds a
direct interest, for example seed capital investments, and the
Group's aggregate economic exposure in the fund relative to
third-party investors is less than the threshold established by the
Group for determining agent versus principal classification. As a
result, the Group concludes that it is an agent for third-party
investors and, therefore, will account for its beneficial interest
in the fund as a financial asset.
The disclosure of the AuM in respect to consolidated and
unconsolidated structured entities is provided in note 27.
Foreign currency
The Group's financial statements are presented in Pounds
Sterling (Sterling), which is also the Company's functional and
presentation currency. Items included in the financial statements
of each of the Group's entities are measured using the functional
currency, which is the currency that prevails in the primary
economic environment in which the entity operates.
Foreign currency transactions
Transactions in foreign currencies are translated into the
respective functional currencies of the Group entities at the spot
exchange rates at the date of the transactions.
Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated into the
functional currency at the spot exchange rate at that date.
Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
Foreign currency differences arising on translation are
generally recognised in comprehensive income, except for qualifying
cash flow hedges to the extent that the hedge is effective, in
which case foreign currency differences arising are recognised in
other comprehensive income.
Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated into Sterling at the spot exchange rates at the balance
sheet date. The revenues and expenses of foreign operations are
translated into Sterling at rates approximating to the foreign
exchange rates ruling at the dates of the transactions.
Foreign currency differences are recognised in other
comprehensive income, and accumulated in the foreign currency
translation reserve, except to the extent that the translation
difference is allocated to non-controlling interests.
When a foreign operation is disposed of such that control is
lost, the cumulative amount in the foreign currency translation
reserve related to that foreign operation is reclassified to
comprehensive income as part of the gain or loss on disposal. If
the Group disposes of only part of its interest in a subsidiary
that includes a foreign operation while retaining control, the
relevant proportion of the cumulative amount is reattributed to
non-controlling interests.
If the settlement of a monetary item receivable from or payable
to a foreign operation is neither planned nor likely in the
foreseeable future, foreign currency differences arising on the
item form part of the net investment in the foreign operation and
are recognised in other comprehensive income, and accumulated in
the foreign currency translation reserve within equity.
Business combinations
Business combinations are accounted for using the acquisition
method as at the acquisition date. The acquisition date is the date
on which the acquirer effectively obtains control of the
acquiree.
The consideration transferred for the acquisition is generally
measured at the acquisition date fair value, as are the
identifiable net assets acquired, liabilities incurred (including
any asset or liability resulting from a contingent consideration
arrangement) and equity instruments issued by the Group in exchange
for control of the acquiree.
Acquisition-related costs are expensed as incurred, except if
they are related to the issue of debt or equity securities.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes in fair
value recognised in profit or loss. If the contingent consideration
is classified as equity, it will not be remeasured and settlement
is accounted for within equity.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date. Any gains or losses arising from such
remeasurement are recognised in profit or loss.
Goodwill
The cost of a business combination in excess of the fair value
of net identifiable assets or liabilities acquired, including
intangible assets identified, is recognised as goodwill and stated
at cost less any accumulated impairment losses. Goodwill has an
indefinite useful life, is not subject to amortisation and is
tested annually for impairment or when there is an indication of
impairment.
Intangible assets
The cost of intangible assets, such as management contracts and
brand names, acquired as part of a business combination is their
fair value as at the date of acquisition. The fair value at the
date of acquisition is calculated using the discounted cash flow
methodology and represents the valuation of the profits expected to
be earned from the management contracts and brand name in place at
the date of acquisition.
Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and impairment losses.
Intangible assets with finite life are amortised on a systematic
basis over their useful lives. The useful life of an intangible
asset which has arisen from contractual or other legal rights does
not exceed the period of the contractual or other legal rights.
Non-controlling interests (NCI)
The Group recognises NCI in an acquired entity either at fair
value or at the NCI's proportionate share of the acquired entity's
net identifiable assets. This decision is made on an
acquisition-by-acquisition basis. Changes to the Group's interest
in a subsidiary that do not result in a loss of control are
accounted for as equity transactions.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. Cost is determined
on the basis of the direct and indirect costs that are directly
attributable. Property, plant and equipment are depreciated using
the straight-line method over the estimated useful lives, assessed
to be five years for office equipment and four years for IT
equipment. The residual values and useful lives of assets are
reviewed at least annually.
The Group's property, plant and equipment include right-of use
assets recognised on lease arrangements in accordance with IFRS 16
Leases.
Leases
The Group's lease arrangements primarily consist of leases
relating to office space. Obligations and rights under lease
agreements are recognised and classified within property, plant and
equipment on the Group's consolidated statement of financial
position in accordance with IFRS 16.
The Group initially records a lease liability reflecting the
present value of the future contractual cash flows to be made over
the lease term, discounted using the rate implicit in the lease,
being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar
terms, security and conditions. Where this rate is not readily
available, the Group applies the incremental borrowing rate
applicable for each lease arrangement. A right-of-use asset is also
recorded at the value of the lease liability plus any directly
related costs and estimated dilapidation expenses and is presented
within property, plant and equipment. Interest is accrued on the
lease liability using the effective interest rate method to give a
constant rate of return over the life of the lease whilst the
balance is reduced as lease payments are made. The right-of-use
asset is depreciated over the life of the lease as the benefit of
the lease is consumed.
After the commencement date, the Group reassesses the lease term
if there is a significant event or change in circumstances that is
within its control and affects the likelihood that it will exercise
(or not exercise) a term extension option.
The cost of short-term (less than 12 months) leases is expensed
on a straight-line basis over the lease term.
Deferred acquisition costs
Costs that are directly attributable to securing an investment
management contract are deferred if they can be identified
separately and measured reliably and it is probable that they will
be recovered. Deferred acquisition costs represent the incremental
costs incurred by the Group to acquire an investment management
contract, typically on a closed-ended fund. The Group amortises the
deferred acquisition asset recognised on a systematic basis, in
line with the revenue generated from providing the investment
management services over the life of the fund.
Financial instruments
Recognition and initial measurement
Financial instruments are recognised when the Group becomes
party to the contractual provisions of an instrument, initially at
fair value plus transaction costs except for financial assets
classified at fair value through profit or loss. Purchases or sales
of financial assets are recognised on the trade date, being the
date that the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive
cash flows from the investments have expired or been transferred or
when the Group has transferred substantially all risks and rewards
of ownership. Financial liabilities are derecognised when the
obligation under the liability has been discharged, cancelled or
expires.
Subsequent measurement
The subsequent measurement of financial instruments depends on
their classification in accordance with IFRS 9 Financial
Instruments.
Under IFRS 9, the Group classifies its financial assets into two
measurement categories: amortised cost and FVTPL. The
classification of financial assets under IFRS 9 is generally based
on the business model in which a financial asset is managed and its
contractual cash flow characteristics. A financial asset is
measured at amortised cost if it meets both of the following
conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
All financial assets not classified as measured at amortised
cost are measured at FVTPL. The Group classifies its financial
liabilities at amortised cost or derivative liabilities measured at
FVTPL.
Amortised cost is the amount determined based on moving the
initial amount recognised for the financial instrument to the
maturity value on a systematic basis using a fixed interest rate
(effective interest rate), taking account of repayment dates and
initial premiums or discounts.
Financial assets
The Group classifies its financial assets into the following
categories: investment securities at FVTPL, financial assets at
FVTPL and financial assets measured at amortised cost.
The Group may, from time to time, invest seed capital in funds
where a subsidiary is the investment manager or an adviser. Where
the holding in such investments is deemed to represent a
controlling stake and is acquired exclusively with a view to
subsequent disposal through sale or dilution, these seed capital
investments are recognised as financial assets measured at FVTPL.
If a seed capital investment remains under the control of the Group
for more than one year from the original investment date, the
underlying fund is consolidated line by line.
Investment securities at FVTPL
Investment securities represent securities, other than
derivatives, held by consolidated funds. These securities are
measured at fair value with gains and losses recognised through the
consolidated statement of comprehensive income.
Financial assets at FVTPL
Financial assets at FVTPL include certain readily realisable
interests in seeded funds, non-current financial assets measured at
fair value and derivatives. From the date the financial asset is
recognised, all subsequent changes in fair value, foreign exchange
differences, interest and dividends are reflected in the
consolidated statement of comprehensive income and presented in
finance income or expense.
(i) Non-current financial assets measured at fair value
Non-current financial assets include closed-end funds that are
measured at FVTPL. They are held at fair value with changes in fair
value being recognised through the consolidated statement of
comprehensive income.
(ii) Current financial assets measured at fair value
The Group classifies readily realisable interests in seeded
funds as current financial assets measured at FVTPL with fair value
changes being directly recognised through the consolidated
statement of comprehensive income. Fair value is measured based on
the proportionate net asset value in the fund.
(iii) Derivatives
Derivatives include foreign exchange forward contracts and
options used by the Group to manage its foreign currency exposures
and those held in consolidated funds. Derivatives are initially
recognised at fair value on the date on which a derivative contract
is entered into and subsequently remeasured at fair value.
Transaction costs are recognised immediately in the statement of
comprehensive income. All derivatives are carried as financial
assets when the fair value is positive and as financial liabilities
when the fair value is negative.
Any gains or losses arising from changes in the fair value of
derivatives are taken directly in comprehensive income, except for
the effective portion of cash flow hedges, which is recognised in
other comprehensive income.
Financial assets measured at amortised cost
(i) Trade and other receivables
Trade and other receivables are initially recorded at fair value
plus transaction costs. The fair value on acquisition is normally
the cost. Subsequent to initial recognition these assets are
measured at amortised cost less impairment loss allowances.
Impairment losses are recognised in the statement of comprehensive
income for expected credit losses, and changes in those expected
credit losses over the life of the instrument. Loss allowances are
calculated based on lifetime expected credit losses at each
reporting date.
(ii) Cash and cash equivalents
Cash represents cash at bank and in hand, and cash equivalents
comprise short-term deposits and investments in money market
instruments that are redeemable on demand or with an original
maturity of three months or less. The carrying amount of these
assets approximates their fair value.
Financial liabilities
The Group classifies its financial liabilities into the
following categories: financial liabilities at FVTPL and financial
liabilities at amortised cost.
Financial liabilities at FVTPL
Financial liabilities at FVTPL include derivative financial
instruments and third-party interests in consolidated funds. They
are carried at fair value with gains or losses recognised in the
consolidated statement of comprehensive income within finance
income or expense.
Financial liabilities at amortised cost
Other financial liabilities including trade and other payables
are subsequently measured at amortised cost using the effective
interest rate method. Interest expense is recognised as it is
incurred using the effective interest method, which allocates
interest at a constant rate of return over the expected life of the
financial instrument based on the estimated future cash flows.
Fair value of financial instruments
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (i.e. the 'exit
price') in an orderly transaction between market participants at
the measurement date. In determining fair value, the Group uses
various valuation approaches and establishes a hierarchy for inputs
used in measuring fair value that maximises the use of relevant
observable inputs and minimises the use of unobservable inputs by
requiring that the most observable inputs be used when available.
Observable inputs are inputs that market participants would use in
pricing the asset or liability developed based on market data
obtained from sources independent of the Group.
Unobservable inputs are inputs that reflect the Group's
judgements about the assumptions other market participants would
use in pricing the asset or liability, developed based on the best
information available in the circumstances.
Securities listed on a recognised stock exchange, or dealt on
any other regulated market that operates regularly, is recognised
and open to the public, are valued at the last known available
closing bid price. If a security is traded on several actively
traded and organised financial markets, the valuation is made on
the basis of the last known bid price on the main market on which
the securities are traded. In the case of securities for which
trading on an actively traded and organised financial market is not
significant, but which are bought and sold on a secondary market
with regulated trading among security dealers (with the effect that
the price is set on a market basis), the valuation may be based on
this secondary market.
Where instruments are not listed on any stock exchange or not
traded on any regulated markets, valuation techniques are used by
valuation specialists. These techniques include the market
approach, the income approach or the cost approach. The use of the
market approach generally consists of using comparable market
transactions or using techniques based on market observable inputs,
while the use of the income approach generally consists of the net
present value of estimated future cash flows, adjusted as deemed
appropriate for liquidity, credit, market and/or other risk
factors.
Investments in funds are valued on the basis of the last
available net asset value of the units or shares of such funds.
The fair value of the derivatives is their quoted market price
at the balance sheet date.
Hedge accounting
The Group applies the general hedge accounting model in IFRS 9.
This requires the Group to ensure that hedge accounting
relationships are aligned with its risk management objectives and
strategy and to apply a more qualitative and forward-looking
approach to assessing hedge effectiveness.
The Group uses forward and option contracts to hedge the
variability in cash flows arising from changes in foreign exchange
rates relating to management fee revenues. The Group designates
only the change in fair value of the spot element of the forward
and option contracts in cash flow hedging relationships. The
effective portion of changes in fair value of hedging instruments
is accumulated in a cash flow hedge reserve as a separate component
of equity.
The Group applies cash flow hedge accounting when the
transaction meets the specified hedge accounting criteria. To
qualify, the following conditions must be met:
- formal documentation of the relationship between the hedging
instrument(s) and hedged item(s) must exist at inception;
- the hedged cash flows must be highly probable and must present
an exposure to variations in cash flows that could ultimately
affect comprehensive income;
- the effectiveness of the hedge can be reliably measured; and
- the hedge must be highly effective, with effectiveness assessed on an ongoing basis.
For qualifying cash flow hedges, the change in fair value of the
effective hedging instrument is initially recognised in other
comprehensive income and is released to comprehensive income in the
same period during which the relevant financial asset or liability
affects the Group's results.
Where the hedge is highly effective overall, any ineffective
portion of the hedge is immediately recognised in comprehensive
income. Where the instrument ceases to be highly effective as a
hedge, or is sold, terminated or exercised, hedge accounting is
discontinued.
Derecognition of financial assets and liabilities
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risk and
rewards of ownership of the asset. The Group derecognises a
financial liability when the Group's obligations are discharged,
cancelled or they expire.
Impairment of financial assets
Under IFRS 9, impairment losses on the Group's financial assets
at amortised cost are measured using an expected credit loss (ECL)
model. Under this model, the Group is required to account for
expected credit losses, and changes in those expected credit
losses, over the life of the instrument. The amount of expected
credit losses is updated at each reporting date to reflect changes
in credit risk since initial recognition and, consequently, more
timely information is provided about expected credit losses.
The Group applies the simplified approach to calculate expected
credit losses for financial assets measured at amortised cost.
Under this approach, expected credit losses are calculated based on
the life of the instrument.
Assets measured at amortised cost
The Group measures loss allowances at an amount equal to
lifetime expected credit losses. Expected credit loss allowances
for financial assets measured at amortised cost are deducted from
the gross carrying amount of the assets. The Group's financial
assets subject to impairment assessment under the ECL model
comprise cash deposits held with banks and trade receivables. In
assessing the impairment of financial assets under the ECL model,
the Group assesses whether the risk of default has increased
significantly since initial recognition, by considering both
quantitative and qualitative information, and the analysis is based
on the Group's historical experience of credit default, including
forward-looking information.
The Group's trade receivables comprise balances due from
management fees, performance fees and expense recoveries from funds
managed, and are generally short term and do not contain financing
components. Factors considered in determining whether a default has
taken place include how many days past the due date a payment is,
deterioration in the credit quality of a counterparty, and
knowledge of specific events that could influence a counterparty's
ability to pay.
The Group assesses lifetime expected credit losses based on
historical observed default rates, adjusted by forward-looking
estimates regarding the economic conditions within the next year.
Externally derived credit ratings have been identified as
representing the best available determinant of counterparty credit
risk for cash balances and credit risk is deemed to have increased
significantly if the credit rating has significantly deteriorated
at the reporting date relative to the credit rating at the date of
initial recognition.
Impairment of non-financial assets
For all other assets other than goodwill, an impairment test is
performed annually or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs of
disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets, other than
goodwill, that have suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting
period.
Goodwill
Goodwill is tested for impairment annually or whenever there is
an indication that the carrying amount may not be recoverable based
on management's judgements regarding the future prospects of the
business, estimates of future cash flows and discount rates. When
assessing the appropriateness of the carrying value of goodwill at
year end, the recoverable amount is considered to be the greater of
fair value less costs to sell or value in use. The pre-tax discount
rate applied is based on the Group's weighted average cost of
capital after making allowances for any specific risks.
The business of the Group is managed as a single unit, with
asset allocations, research and other such operational practices
reflecting the commonality of approach across all fund themes.
Therefore, for the purpose of testing goodwill for impairment, the
Group is considered to have one cash-generating unit to which all
goodwill is allocated and, as a result, no further split of
goodwill into smaller cash-generating units is possible and the
impairment review is conducted for the Group as a whole.
An impairment loss in respect of goodwill cannot be
reversed.
Net revenue
Net revenue is total revenue less distribution costs and
including foreign exchange. The Group's total revenue includes
management fees, performance fees and other revenue. The primary
revenue source for the Group is fee income received or receivable
for the provision of investment management services.
The Group recognises revenue in accordance with the principles
of IFRS 15 Revenue from Contracts with Customers.
The core principle of IFRS 15 is that revenue is recognised to
reflect the transfer of promised goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The
Group applies the IFRS 15 five-step model for recognising revenue,
which consists of identifying the contract with the customer;
identifying the relevant performance obligations; determining the
amount of consideration to be received under the contract;
allocating the consideration to each performance obligation; and
earning the revenue as the performance obligations are
satisfied.
The Group's principal revenue recognition policies are
summarised below:
Management fees
Management fees are presented net of rebates, and are calculated
as a percentage of net fund assets managed in accordance with
individual management agreements. Management fees are calculated
and recognised on a monthly basis in accordance with the terms of
the management fee agreements. Management fees are typically
collected on a monthly or quarterly basis.
Performance fees
Performance fees are presented net of rebates, and are
calculated as a percentage of the appreciation in the net asset
value of a fund above a defined hurdle. Performance fees are earned
from some arrangements when contractually agreed performance levels
are exceeded within specified performance measurement periods,
typically over one year. The fees are recognised when they can be
reliably estimated and/or crystallised, and there is deemed to be a
low probability of a significant reversal in future periods. This
is usually at the end of the performance period or upon early
redemption by a fund investor. Once crystallised, performance fees
typically cannot be clawed-back.
Rebates
Rebates relate to repayments of management and performance fees
charged subject to a rebate agreement, typically with institutional
investors, and are calculated based on an agreed percentage of net
fund assets managed and recognised as the service is received.
Where rebate agreements exist, management and performance fees are
presented on a net basis in the consolidated statement of
comprehensive income.
Other revenue
Other revenue principally comprises fees for other services,
which are typically driven by the volume of transactions, along
with revenues that vary in accordance with the volume of fund
project development activities.
Other revenue includes transaction, structuring and
administration fees, project management fees, and reimbursement by
funds of costs incurred by the Group. This revenue is recognised as
the relevant service is provided and it is probable that the fee
will be collected.
Distribution costs
Distribution costs are costs of sales payable to external
intermediaries for marketing and investor servicing. Distribution
costs vary based on fund assets managed and the associated
management fee revenue, and are expensed over the period in which
the service is provided.
Employee benefits
Obligations for contributions to defined contribution pension
plans are recognised as an expense in the statement of
comprehensive income when payable in accordance with the scheme
particulars.
Share-based payments
The Group issues share awards to its employees under share-based
compensation plans.
For equity-settled awards, the fair value of the amounts payable
to employees is recognised as an expense with a corresponding
increase in equity over the vesting period after adjusting for the
estimated number of shares that are expected to vest. The fair
value is measured at the grant date using an appropriate valuation
model, taking into account the terms and conditions upon which the
instruments were granted. At each balance sheet date prior to
vesting, the cumulative expense representing the extent to which
the vesting period has expired and management's best estimate of
the awards that are ultimately expected to vest is calculated. The
movement in cumulative expense is recognised in the statement of
comprehensive income with a corresponding entry within equity.
For cash-settled awards, the fair value of the amounts payable
to employees is recognised as an expense with a corresponding
liability on the Group's balance sheet. The fair value is measured
using an appropriate valuation model, taking into account the
estimated number of awards that are expected to vest and the terms
and conditions upon which the instruments were granted. During the
vesting period, the liability recognised represents the portion of
the vesting period that has expired at the balance sheet date
multiplied by the fair value of the awards at that date. Movements
in the liability are recognised in the statement of comprehensive
income.
The Group has in place an intragroup recharge arrangement for
equity-settled share-based awards whereby the parent Company is
reimbursed based on the grant-date cost of share awards granted to
employees of the subsidiary entity. During the vest period, the
subsidiary entity recognises a share-based payment expense in
accordance with IFRS 2 requirements with an intercompany payable to
the parent Company. The parent Company recognises an intercompany
receivable and a corresponding credit within equity as a
share-based payment reserve. The intercompany balances are settled
regularly and reported as current assets/liabilities.
Finance income and expense
Finance income includes interest receivable on the Group's cash
and cash equivalents, and both realised and unrealised gains on
financial assets at FVTPL.
Finance expense includes both realised and unrealised losses on
financial assets at FVTPL. Interest expense on lease liabilities is
presented within finance expense.
Taxation
Tax expense for the year comprises current and deferred tax. Tax
is recognised in the consolidated statement of comprehensive income
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity.
Current tax
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year, and any adjustment to the
tax payable or receivable in respect of previous years. It is
measured using tax rates enacted or substantively enacted at the
balance sheet date in the countries where the Group operates.
Current tax also includes withholding tax arising from
dividends.
Deferred tax
Deferred tax is recognised using the balance sheet liability
method, in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following
differences are not provided for:
- goodwill not deductible for tax purposes; and
- differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the reporting date.
Deferred tax assets are recognised only to the extent that it is
probable that future taxable profits will be available against
which the assets can be utilised. Deferred tax assets are reviewed
at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the balance sheet
date.
Dividends
Dividends are recognised when shareholders' rights to receive
payments have been established.
Equity shares
The Company's ordinary shares of 0.01 pence each are classified
as equity instruments. Ordinary shares issued by the Company are
recorded at the fair value of the consideration received or the
market price at the day of issue. Direct issue costs, net of tax,
are deducted from equity through share premium. When share capital
is repurchased, the amount of consideration paid, including
directly attributable costs, is recognised as a change in
equity.
Own shares
Own shares are held by the Employee Benefit Trust (EBT). The
holding of the EBT comprises own shares that have not vested
unconditionally to employees of the Group. In both the Group and
Company, own shares are recorded at cost and are deducted from
retained earnings.
Segmental information
Key management information, including revenues, margins,
investment performance, distribution costs and AuM flows, which is
relevant to the operation of the Group, is reported to and reviewed
by the Board on the basis of the investment management business as
a whole. Hence, the Group's management considers that the Group's
services and its operations are not run on a discrete geographic
basis and comprise one business segment (being provision of
investment management services).
Company-only accounting policies
In addition to the above accounting policies, the following
specifically relates to the Company:
Investment in subsidiaries
Investments by the Company in subsidiaries are stated at cost
less, where appropriate, provisions for impairment.
5) 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 GBP106.2 million
for the year as reconciled in the Business review (FY2022: adjusted
EBITDA of GBP164.3 million was derived by adjusting operating
profit by GBP3.1 million of depreciation and amortisation expense,
GBP46.2 million of loss related to seed capital and GBP4.2 million
of foreign exchange gains). The disclosures below are
supplementary, and provide the location of the Group's non-current
assets at year end other than financial assets and deferred tax
assets. Disclosures relating to revenue by location are in note
6.
Analysis of non-current assets by geography
2023 2022
GBPm GBPm
--------------------------- ----- -----
United Kingdom and Ireland 24.3 26.5
United States 69.8 73.5
Other 1.9 2.5
--------------------------- ----- -----
Total non-current assets 96.0 102.5
--------------------------- ----- -----
6) Revenue
Management fees are accrued throughout the year in line with
prevailing levels of AuM and performance fees are recognised when
they can be estimated reliably and it is probable that they will
crystallise. The Group is not considered to be reliant on any
single source of revenue. During the year, none of the Group's
funds (FY2022: none) provided more than 10% of total revenue in the
year respectively when considering management fees and performance
fees on a combined basis.
Analysis of revenue by geography
2023 2022
GBPm GBPm
--------------------------- ----- -----
United Kingdom and Ireland 142.3 193.6
United States 13.7 22.0
Other 37.2 38.8
--------------------------- ----- -----
Total revenue 193.2 254.4
--------------------------- ----- -----
7) 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 Average
Closing Closing rate rate
rate rate year year
as at as at ended ended
30 June 30 June 30 June 30 June
GBP1 2023 2022 2023 2022
------------------ -------- -------- -------- --------
US dollar 1.2714 1.2145 1.2079 1.3289
Euro 1.1653 1.1617 1.1523 1.1785
Indonesian rupiah 19,061 18,092 18,259 19,146
Colombian peso 5,309 5,053 5,519 5,164
------------------ -------- -------- -------- --------
Foreign exchange gains are shown below.
2023 2022
GBPm GBPm
------------------------------------------------------- ----- -----
Net realised and unrealised hedging gains 4.4 6.3
Translation gains on non-Sterling denominated monetary
assets and liabilities 1.0 5.3
------------------------------------------------------- ----- -----
Total foreign exchange gains 5.4 11.6
------------------------------------------------------- ----- -----
8) Finance income/(expense)
2023 2022
GBPm GBPm
---------------------------------------------------------- ----- -----
Interest and investment income 27.2 7.7
Net realised gains on seed capital investments measured
at fair value 2.4 0.1
Net unrealised gains/(losses) on seed capital investments
measured at fair value 4.6 (9.5)
Interest expense on lease liabilities (note 16) (0.3) (0.4)
---------------------------------------------------------- ----- -----
Total finance income/(expense) 33.9 (2.1)
---------------------------------------------------------- ----- -----
Included within interest and investment income is interest
earned on cash deposits of GBP16.2 million (FY2022: GBP2.0 million)
and investment income of GBP11.0 million (FY2022: GBP5.7 million)
on consolidated funds (note 20c).
Included within net realised and unrealised gains on seed
capital investments totalling GBP7.0 million (FY2022: GBP9.4
million losses) are GBP2.6 million gains (FY2022: GBP12.5 million
losses) on financial assets measured at FVTPL (note 20a), GBP1.4
million gains (FY2022: GBP4.2 million gains) on non-current
financial assets measured at fair value (note 20b) and GBP3.0m
realised gains on consolidated funds (FY2022: GBP1.1 million losses
on financial assets held for sale).
9) Personnel expenses
Personnel expenses during the year comprised the following:
2023 2022
GBPm GBPm
--------------------------------- ----- -----
Wages and salaries 24.0 22.1
Performance-related cash bonuses 17.3 20.7
Share-based payments (note 10) 17.5 24.9
Social security costs 2.4 1.9
Pension costs 2.1 1.8
Other costs 2.9 2.0
--------------------------------- ----- -----
Total personnel expenses 66.2 73.4
--------------------------------- ----- -----
Number of employees
At 30 June 2023, the number of investment management employees
of the Group (including Executive Directors) during the year was as
follows:
Average Average
for for
the year the year
ended ended At At
30 June 30 June 30 June 30 June
2023 2022 2023 2022
Number Number Number Number
-------------------------------------- --------- --------- -------- --------
Total investment management employees 309 305 310 309
-------------------------------------- --------- --------- -------- --------
Directors' remuneration
Disclosures of Directors' remuneration during the year as
required by the Companies Act 2006 are included in the Remuneration
report.
There are retirement benefits accruing to two Executive
Directors under a defined contribution scheme (FY2022: two).
10) Share-based payments
The cost related to share-based payments recognised by the Group
in the statement of comprehensive income is shown below:
2023 2022
Group GBPm GBPm
----------------------------------- ----- -----
Omnibus Plan 17.4 25.1
Phantom Bonus Plan 0.1 (0.2)
----------------------------------- ----- -----
Total share-based payments expense 17.5 24.9
----------------------------------- ----- -----
The total expense recognised for the year in respect of
equity-settled share-based payment awards was GBP18.5 million
(FY2022: GBP24.5 million), of which GBP0.4 million (FY2022: GBP0.2
million) relates to share awards granted to key management
personnel.
The Executive Omnibus Incentive Plan (Omnibus Plan)
The Omnibus Plan was introduced prior to the Company listing in
October 2006 and provides for the grant of share awards, market
value options, premium cost options, discounted options, linked
options, phantoms and/or nil-cost options to employees. The Omnibus
Plan will also allow bonuses to be deferred in the form of share
awards with or without matching shares. Awards granted under the
Omnibus Plan typically vest after five years from date of grant,
with the exception of bonus awards which vest after the shorter of
five years from date of grant or on the date of termination of
employment. Awards under the Omnibus Plan are accounted for as
equity-settled, with the exception of phantoms which are classified
as cash-settled.
The combined cash and equity-settled payments below represent
the share-based payments relating to the Omnibus Plan.
Total expense by year awards were granted (excluding national
insurance)
Group and Company 2023 2022
Year of grant GBPm GBPm
------------------------------------------------------- ----- -----
2017 - 3.2
2018 3.0 2.9
2019 3.7 3.5
2020 3.5 3.5
2021 3.9 5.5
2022 3.3 5.7
2023 1.2 -
------------------------------------------------------- ----- -----
Total Omnibus share-based payments expense reported in
comprehensive income 18.6 24.3
------------------------------------------------------- ----- -----
Awards outstanding under the Omnibus Plan were as follows:
i) Equity-settled awards
2023 2022 2022
2023 Weighted Number Weighted
Number of average of shares average
shares subject share subject share
Group and Company to awards price to awards price
------------------------------- --------------- --------- ----------- ---------
Restricted share awards
------------------------------- --------------- --------- ----------- ---------
At the beginning of the year 19,311,495 GBP3.65 19,997,393 GBP3.58
Granted 5,553,128 GBP2.14 4,423,544 GBP3.71
Vested (4,671,286) GBP3.25 (3,874,613) GBP3.44
Forfeited (1,160,520) GBP2.17 (1,234,829) GBP3.44
------------------------------- --------------- --------- ----------- ---------
Awards outstanding at year end 19,032,817 GBP3.32 19,311,495 GBP3.65
------------------------------- --------------- --------- ----------- ---------
Bonus share awards
------------------------------- --------------- --------- ----------- ---------
At the beginning of the year 10,997,593 GBP3.64 10,617,648 GBP3.58
Granted 3,014,720 GBP2.14 2,285,034 GBP3.75
Vested (3,686,132) GBP2.87 (1,905,089) GBP3.44
Forfeited (179,660) GBP3.67 - -
------------------------------- --------------- --------- ----------- ---------
Awards outstanding at year end 10,146,521 GBP3.31 10,997,593 GBP3.64
------------------------------- --------------- --------- ----------- ---------
Matching share awards
------------------------------- --------------- --------- ----------- ---------
At the beginning of the year 10,379,745 GBP3.65 10,687,135 GBP3.58
Granted 3,031,105 GBP2.14 2,297,585 GBP3.75
Vested (2,547,699) GBP3.28 (1,881,231) GBP3.44
Forfeited (652,622) GBP2.18 (723,744) GBP3.42
------------------------------- --------------- --------- ----------- ---------
Awards outstanding at year end 10,210,529 GBP3.31 10,379,745 GBP3.65
------------------------------- --------------- --------- ----------- ---------
Total 39,389,867 GBP3.32 40,688,833 GBP3.65
------------------------------- --------------- --------- ----------- ---------
ii) Cash-settled awards
2022
2023 Number 2022
2023 Weighted of Weighted
Number of average shares average
shares subject share subject share
Group and Company to awards price to awards price
------------------------------- --------------- --------- ---------- ---------
Restricted share awards
------------------------------- --------------- --------- ---------- ---------
At the beginning of the year 110,280 GBP3.60 122,239 GBP3.53
Granted 47,785 GBP2.14 15,741 GBP3.75
Vested (45,003) GBP3.24 (27,700) GBP3.40
Forfeited - - - -
------------------------------- --------------- --------- ---------- ---------
Awards outstanding at year end 113,062 GBP3.13 110,280 GBP3.60
------------------------------- --------------- --------- ---------- ---------
Bonus share awards
------------------------------- --------------- --------- ---------- ---------
At the beginning of the year 80,511 GBP3.60 80,765 GBP3.55
Granted 34,982 GBP2.14 11,276 GBP3.75
Vested (33,753) GBP3.24 (11,530) GBP3.40
Forfeited - - - -
------------------------------- --------------- --------- ---------- ---------
Awards outstanding at year end 81,740 GBP3.12 80,511 GBP3.60
------------------------------- --------------- --------- ---------- ---------
Matching share awards
------------------------------- --------------- --------- ---------- ---------
At the beginning of the year 80,511 GBP3.60 80,765 GBP3.55
Granted 34,982 GBP2.14 11,276 GBP3.75
Vested (33,753) GBP3.24 (11,530) GBP3.40
Forfeited - - - -
------------------------------- --------------- --------- ---------- ---------
Awards outstanding at year end 81,740 GBP3.12 80,511 GBP3.60
------------------------------- --------------- --------- ---------- ---------
Total 276,542 GBP3.13 271,302 GBP3.60
------------------------------- --------------- --------- ---------- ---------
iii) Total awards
2022
2023 Number 2022
2023 Weighted of Weighted
Number of average shares average
shares subject share subject share
Group and Company to awards price to awards price
------------------------------- --------------- --------- ----------- ---------
Restricted share awards
------------------------------- --------------- --------- ----------- ---------
At the beginning of the year 19,421,775 GBP3.65 20,119,632 GBP3.58
Granted 5,600,913 GBP2.14 4,439,285 GBP3.71
Vested (4,716,289) GBP3.25 (3,902,313) GBP3.44
Forfeited (1,160,520) GBP2.17 (1,234,829) GBP3.44
------------------------------- --------------- --------- ----------- ---------
Awards outstanding at year end 19,145,879 GBP3.32 19,421,775 GBP3.65
------------------------------- --------------- --------- ----------- ---------
Bonus share awards
------------------------------- --------------- --------- ----------- ---------
At the beginning of the year 11,078,104 GBP3.64 10,698,413 GBP3.58
Granted 3,049,702 GBP2.14 2,296,310 GBP3.75
Vested (3,719,885) GBP2.87 (1,916,619) GBP3.44
Forfeited (179,660) GBP3.67 - -
------------------------------- --------------- --------- ----------- ---------
Awards outstanding at year end 10,228,261 GBP3.31 11,078,104 GBP3.64
------------------------------- --------------- --------- ----------- ---------
Matching share awards
------------------------------- --------------- --------- ----------- ---------
At the beginning of the year 10,460,256 GBP3.65 10,767,900 GBP3.58
Granted 3,066,087 GBP2.14 2,308,861 GBP3.75
Vested (2,581,452) GBP3.28 (1,892,761) GBP3.44
Forfeited (652,622) GBP2.18 (723,744) GBP3.42
------------------------------- --------------- --------- ----------- ---------
Awards outstanding at year end 10,292,269 GBP3.31 10,460,256 GBP3.65
------------------------------- --------------- --------- ----------- ---------
Total 39,666,409 GBP3.32 40,960,135 GBP3.65
------------------------------- --------------- --------- ----------- ---------
The weighted average fair value of awards granted to employees
under the Omnibus Plan during the year was GBP2.14 (FY2022:
GBP3.73), calculated based on the average Ashmore Group plc closing
share price for the five business days prior to grant. For
Executive Directors, the fair value of awards also takes into
account the performance conditions set out in the Remuneration
report.
Where the grant of restricted and matching share awards is
linked to the annual bonus process, the fair value of the awards is
spread over a period including the current financial year and the
subsequent five years to their vesting date when the grantee
becomes unconditionally entitled to the underlying shares. The fair
value of the remaining awards is spread over the period from the
date of grant to the vesting date.
The liability arising from cash-settled awards under the Omnibus
Plan at the end of the year and reported within trade and other
payables on the Group consolidated balance sheet is GBP0.3 million
(30 June 2022: GBP0.4 million) of which GBPnil (30 June 2022:
GBPnil) relates to vested awards.
11) Other expenses
Other expenses consist of the following:
2023 2022
GBPm GBPm
-------------------------------------------------------- ----- -----
Travel 2.1 0.9
Professional fees 5.5 4.7
Information technology and communications 7.8 7.3
Amortisation of intangible assets (note 15) 0.2 0.2
Lease expenses 0.4 0.4
Depreciation of property, plant and equipment (note 16) 3.0 2.9
Premises-related costs 1.3 1.3
Insurance 1.0 1.0
Research costs 0.4 0.4
Auditor's remuneration (see below) 0.9 0.9
Consolidated funds 1.1 1.2
Other expenses 4.1 3.9
-------------------------------------------------------- ----- -----
27.8 25.1
-------------------------------------------------------- ----- -----
Lease expenses relates to short-term leases where the Group has
applied the optional exemption contained within IFRS 16, which
permits the cost of short-term leases (less than 12 months) to be
expensed on a straight-line basis over the lease term.
Auditor's remuneration
2023 2022
GBPm GBPm
----------------------------------------------------------- ----- -----
Fees for statutory audit services:
* Fees payable to the Company's auditor for the audit
of the Group's accounts 0.2 0.2
* Fees payable to the Company's auditor and its
associates for the audit of the Company's
subsidiaries pursuant to legislation 0.5 0.5
Fees for non-audit services:
* Other non-audit services 0.2 0.2
----------------------------------------------------------- ----- -----
0.9 0.9
----------------------------------------------------------- ----- -----
12) Taxation
Analysis of tax charge for the year:
2023 2022
GBPm GBPm
-------------------------------------------------------- ----- -----
Current tax
UK corporation tax on profits for the year 5.6 11.1
Overseas corporation tax charge 10.5 14.9
Adjustments in respect of prior years 0.1 (0.5)
-------------------------------------------------------- ----- -----
16.2 25.5
Deferred tax
Origination and reversal of temporary differences (note
18) 9.1 1.0
-------------------------------------------------------- ----- -----
Tax expense 25.3 26.5
-------------------------------------------------------- ----- -----
Factors affecting tax charge for the year
2023 2022
GBPm GBPm
-------------------------------------------------------- ----- -----
Profit before tax 111.8 118.4
-------------------------------------------------------- ----- -----
Profit on ordinary activities multiplied by the blended
UK tax rate of 20.5% (FY2022: UK tax rate of 19%) 22.9 22.5
Effects of:
Permanent differences including non-taxable income and
non-deductible expenses 7.4 4.7
Different rate of taxes on overseas profits (3.2) (3.3)
Non-deductible/(non-taxable) investment returns(1) (1.9) 3.2
Adjustments in respect of prior years 0.1 (0.6)
-------------------------------------------------------- ----- -----
Tax expense 25.3 26.5
-------------------------------------------------------- ----- -----
1. Non-taxable investment returns comprise seed capital
investment gains/losses in certain jurisdictions in which the Group
operates for which there are local tax exemptions.
The tax charge/(credit) recognised in reserves within other
comprehensive income is as follows:
2023 2022
GBPm GBPm
---------------------------------------------------------------- ----- -----
Current tax expense/(credit) on foreign exchange gains/(losses) (0.6) 2.9
---------------------------------------------------------------- ----- -----
Tax expense/(credit) recognised in reserves (0.6) 2.9
---------------------------------------------------------------- ----- -----
13) Earnings per share
Basic earnings per share at 30 June 2023 of 12.43 pence (30 June
2022: 13.42 pence) is calculated by dividing the profit after tax
for the financial year attributable to equity holders of the parent
of GBP83.3 million (FY2022: GBP88.5 million) by the weighted
average number of ordinary shares in issue during the year,
excluding own shares.
Diluted earnings per share is calculated based on basic earnings
per share adjusted for dilutive potential ordinary shares. There is
no difference between the profit for the year attributable to
equity holders of the parent used in the basic and diluted earnings
per share calculations.
The weighted average number of shares used in calculating basic
and diluted earnings per share are shown below.
2023 2022
Number Number
of ordinary of ordinary
shares shares
------------------------------------------------------- ------------ ------------
Weighted average number of ordinary shares used in the
calculation of basic earnings per share 670,224,113 659,466,487
Weighted average number of ordinary shares used in the
calculation of diluted earnings per share 685,760,649 702,124,339
------------------------------------------------------- ------------ ------------
14) Dividends
Dividends paid in the year
2023 2022
Company GBPm GBPm
---------------------------------------------------- ----- -----
Final dividend for FY2022 - 12.10p (FY2021: 12.10p) 84.8 85.0
Interim dividend FY2023 - 4.80p (FY2022: 4.80p) 33.6 33.5
---------------------------------------------------- ----- -----
118.4 118.5
---------------------------------------------------- ----- -----
In addition, the Group paid GBP3.3 million (FY2022: GBP3.0
million) of dividends to non-controlling interests.
Dividends declared/proposed in respect of the year
2023 2022
Company pence pence
---------------------------------- ------ ------
Interim dividend per share paid 4.80 4.80
Final dividend per share proposed 12.10 12.10
---------------------------------- ------ ------
16.90 16.90
---------------------------------- ------ ------
On 5 September 2023, the Board proposed a final dividend of
12.10 pence per share for the year ended 30 June 2023. This has not
been recognised as a liability of the Group at the year end as it
has not yet been approved by shareholders. Based on the number of
shares in issue at the year end that qualify to receive a dividend,
the total amount payable would be GBP85.1 million.
15) Goodwill and intangible assets
Fund management
intangible
Goodwill assets Total
Group GBPm GBPm GBPm
----------------------------------------------- -------- --------------- -----
Cost (at original exchange rate)
----------------------------------------------- -------- --------------- -----
At 30 June 2023 and 2022 70.4 0.9 71.3
----------------------------------------------- -------- --------------- -----
Accumulated amortisation and impairment
----------------------------------------------- -------- --------------- -----
At 30 June 2021 - (0.5) (0.5)
Amortisation charge for the year - (0.1) (0.1)
----------------------------------------------- -------- --------------- -----
At 30 June 2022 - (0.6) (0.6)
Amortisation charge for the year - (0.1) (0.1)
----------------------------------------------- -------- --------------- -----
At 30 June 2023 - (0.7) (0.7)
----------------------------------------------- -------- --------------- -----
Net book value
----------------------------------------------- -------- --------------- -----
At 30 June 2021 80.1 0.4 80.5
Accumulated amortisation for the year - (0.1) (0.1)
Foreign exchange revaluation through reserves* 10.4 0.1 10.5
----------------------------------------------- -------- --------------- -----
At 30 June 2022 90.5 0.4 90.9
Accumulated amortisation for the year - (0.1) (0.1)
Foreign exchange revaluation through reserves* (3.8) (0.1) (3.9)
----------------------------------------------- -------- --------------- -----
At 30 June 2023 86.7 0.2 86.9
----------------------------------------------- -------- --------------- -----
* Foreign exchange revaluation through reserves is a result of
the retranslation of US dollar-denominated intangibles and
goodwill.
Goodwill
Company GBPm
--------------------------------------------- --------
Cost
At the beginning and end of the year 4.1
--------------------------------------------- --------
Net carrying amount at 30 June 2023 and 2022 4.1
--------------------------------------------- --------
Goodwill
The Group's goodwill balance relates to the acquisition of
subsidiaries. The Company's goodwill balance relates to the
acquisition of the business from ANZ in 1999.
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. Based on this model, the Group's investment management
activities are considered as a single cash-generating unit, for
which key management regularly receive and review internal
financial information.
An annual impairment review of goodwill was undertaken for the
year ending 30 June 2023, and no factors indicating potential
impairment of goodwill were noted. Goodwill is tested for
impairment annually or whenever there is an indication that the
carrying amount may not be recoverable based on management's
judgements regarding the future prospects of the business, market
capitalisation, macroeconomic and market considerations. The key
assumption used to determine the recoverable amount is based on a
fair value calculation using the Company's market share price.
Based on the calculation as at 30 June 2023 using a market share
price of GBP2.08, 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 years.
Fund management intangible assets
Intangible assets as at 30 June 2023 comprise fund management
contracts recognised by the Group on the acquisition of Ashmore
Avenida Investments (Real Estate) LLP in July 2018.
16) Property, plant and equipment
The Group's property, plant and equipment include right-of-use
assets recognised on lease arrangements as follows:
Group Company
GBPm GBPm
------------------------------------------------- ----- -------
Property, plant and equipment owned by the Group 1.2 0.9
Right-of-use assets 5.3 3.2
------------------------------------------------- ----- -------
Net book value at 30 June 2023 6.5 4.1
------------------------------------------------- ----- -------
The movement in property, plant and equipment is provided
below:
2023 2022
Property, Property,
plant plant
and equipment and equipment
Group GBPm GBPm
--------------------------------- -------------- --------------
Cost
At the beginning of the year 23.0 21.9
Additions 0.6 0.5
Foreign exchange revaluation (0.6) 0.6
--------------------------------- -------------- --------------
At the end of the year 23.0 23.0
--------------------------------- -------------- --------------
Accumulated depreciation
At the beginning of the year 13.9 10.7
Depreciation charge for the year 3.0 2.9
Foreign exchange revaluation (0.4) 0.3
--------------------------------- -------------- --------------
At the end of the year 16.5 13.9
--------------------------------- -------------- --------------
Net book value at 30 June 6.5 9.1
--------------------------------- -------------- --------------
2023 2022
Property, Property,
plant plant
and equipment and equipment
Company GBPm GBPm
----------------------------- -------------- --------------
Cost
At the beginning of the year 13.9 13.5
Additions 0.3 0.4
----------------------------- -------------- --------------
At the end of the year 14.2 13.9
----------------------------- -------------- --------------
Accumulated depreciation
At the beginning of the year 8.4 6.8
Depreciation charge for year 1.7 1.6
----------------------------- -------------- --------------
At the end of the year 10.1 8.4
----------------------------- -------------- --------------
Net book value at 30 June 4.1 5.5
----------------------------- -------------- --------------
Lease arrangements
The Group leases office space in various countries and enters
into lease agreements on office premises with remaining lease
periods of one to six years. Lease terms are negotiated on an
individual basis and contain varying terms and conditions depending
on location. The lease agreements do not impose any covenants other
than the security interests in the leased assets that are held by
the lessor. The Group calculates the lease liabilities using the
lessee's incremental borrowing rates that resulted in a weighted
average incremental borrowing rate of 4.9% (FY2022: 4.6%).
The carrying value of right-of-use assets, lease liabilities and
the movement during the year are set out below.
Group Company
-------------------------- --------------------------
Right-of-use Lease Right-of-use Lease
assets liabilities assets liabilities
GBPm GBPm GBPm GBPm
---------------------------------------------- ------------ ------------ ------------ ------------
At 30 June 2021 9.4 9.8 5.5 5.7
Lease payments - (2.4) - (1.3)
Interest expense (note 8) - 0.4 - 0.2
Depreciation charge (2.1) - (1.1) -
Foreign exchange revaluation through reserves 0.3 0.2 - -
---------------------------------------------- ------------ ------------ ------------ ------------
At 30 June 2022 7.6 8.0 4.4 4.6
---------------------------------------------- ------------ ------------ ------------ ------------
Additions 0.2 0.1 - -
Lease payments - (2.5) - (1.3)
Interest expense (note 8) - 0.3 - 0.1
Depreciation charge (2.4) - (1.2) -
Foreign exchange revaluation through reserves (0.1) (0.1) - -
---------------------------------------------- ------------ ------------ ------------ ------------
At 30 June 2023 5.3 5.8 3.2 3.4
---------------------------------------------- ------------ ------------ ------------ ------------
The contractual maturities on the minimum lease payments under
lease liabilities are provided below:
Group Company
---------------- ----------------
30 June 30 June 30 June 30 June
Maturity analysis - contractual undiscounted cash 2023 2022 2023 2022
flows GBPm GBPm GBPm GBPm
----------------------------------------------------- ------- ------- ------- -------
Within 1 year 2.4 2.6 1.3 1.3
Between 1 and 5 years 3.9 6.0 2.3 3.7
Later than 5 years - 0.2 - -
----------------------------------------------------- ------- ------- ------- -------
Total undiscounted lease liabilities 6.3 8.8 3.6 5.0
----------------------------------------------------- ------- ------- ------- -------
Lease liabilities are presented in the balance sheet
as follows:
----------------------------------------------------- ------- ------- ------- -------
Current 2.1 2.2 1.2 1.3
Non-current 3.7 5.8 2.2 3.3
----------------------------------------------------- ------- ------- ------- -------
Total lease liabilities 5.8 8.0 3.4 4.6
----------------------------------------------------- ------- ------- ------- -------
Amounts recognised under financing activities in
the cash flow statement:
----------------------------------------------------- ------- ------- ------- -------
Payment of lease liabilities 2.2 2.0 1.2 1.1
Interest paid 0.3 0.4 0.1 0.2
----------------------------------------------------- ------- ------- ------- -------
Total cash outflow for leases 2.5 2.4 1.3 1.3
----------------------------------------------------- ------- ------- ------- -------
17) Trade and other receivables
Group Company
------------ ------------
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
---------------------------------- ----- ----- ----- -----
Trade debtors 60.7 66.1 2.1 1.0
Prepayments 4.4 3.5 1.9 2.1
Amounts due from subsidiaries - - 10.4 73.8
Loans due from subsidiaries - - 266.4 376.9
Other receivables 5.3 4.7 3.6 3.1
---------------------------------- ----- ----- ----- -----
Total trade and other receivables 70.4 74.3 284.4 456.9
---------------------------------- ----- ----- ----- -----
Group trade debtors include accrued management and performance
fees in respect of investment management services provided up to 30
June 2023. Management fees are received in cash when the funds' net
asset values are determined, typically every month or every
quarter. Performance fees are accrued when crystallised, and
amounted to GBP1.3 million as at 30 June 2023 (30 June 2022: GBP0.5
million).
The majority of fees are deducted from the net asset values of
the respective funds by independent administrators and therefore
the credit risk of fee receivables is minimal. As at 30 June 2023,
the assessed provision for expected credit losses was immaterial
and the Group has not recognised any expected credit losses in the
current year (30 June 2022: GBPnil).
Amounts due from subsidiaries for the Company represent
intercompany trading balances that are repayable within one
year.
Loans due from subsidiaries for the Company include an
intercompany loan to a subsidiary related to the provision of
funding for seed capital investments and cash invested by the
subsidiary in daily-traded investment funds. Loans due from
subsidiaries included within non-current assets amounted to
GBP167.8 million as at 30 June 2023 (30 June 2022: GBP132.0 million
included within non-current assets). The intercompany loan is
repayable on demand and the amount classified as current is
regularly settled during the year. Under the IFRS 9 expected credit
loss model, credit risk is assessed by determining the borrower's
capacity to meet contractual cash flow obligations, taking into
account the available net assets to repay the intercompany balance
in future periods. Expected credit losses are estimated based on
the assumption that repayment is demanded at the reporting date. If
the borrower has sufficient accessible highly liquid assets
available to settle the balance if demanded at the reporting date,
the expected credit loss has been assessed to be immaterial. In
line with the Company's historical experience, and after
consideration of current credit exposures, the Company does not
expect to incur any credit losses and has not recognised any
expected credit losses in the current year (30 June 2022:
GBPnil).
18) Deferred taxation
Deferred tax assets and liabilities recognised by the Group and
Company at year end are attributable to the following:
2023 2022
-------------------------------- --------------------------------
Other Other
temporary Share-based temporary Share-based
differences payments Total differences payments Total
Group GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------------ ----------- ----- ------------ ----------- -----
Deferred tax assets 11.0 12.9 23.9 12.5 20.2 32.7
Deferred tax liabilities (9.3) - (9.3) (8.8) - (8.8)
------------------------- ------------ ----------- ----- ------------ ----------- -----
1.7 12.9 14.6 3.7 20.2 23.9
------------------------- ------------ ----------- ----- ------------ ----------- -----
2023 2022
------------------------- -------------------------------- --------------------------------
Other Other
temporary Share-based temporary Share-based
differences payments Total differences payments Total
Company GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------------ ----------- ----- ------------ ----------- -----
Deferred tax assets - 11.6 11.6 - 18.2 18.2
------------------------- ------------ ----------- ----- ------------ ----------- -----
Deferred taxes at the balance sheet date reflected in these
financial statements have been measured using the relevant enacted
or substantively enacted tax rate for the year in which they are
expected to be realised or settled.
Movement of deferred tax balances
The movement in the deferred tax balances between the balance
sheet dates has been reflected in the statement of comprehensive
income as follows:
Other
temporary Share-based
differences payments Total
Group GBPm GBPm GBPm
------------------------------------------------------- ------------ ----------- -----
At 30 June 2021 (2.9) 27.2 24.3
Credited/(charged) to the consolidated statement
of comprehensive income 6.0 (7.0) (1.0)
Foreign exchange revaluation 0.6 - 0.6
------------------------------------------------------- ------------ ----------- -----
At 30 June 2022 3.7 20.2 23.9
------------------------------------------------------- ------------ ----------- -----
Charged to the consolidated statement of comprehensive
income (1.8) (7.3) (9.1)
Foreign exchange revaluation (0.2) - (0.2)
------------------------------------------------------- ------------ ----------- -----
At 30 June 2023 1.7 12.9 14.6
------------------------------------------------------- ------------ ----------- -----
Other
temporary Share-based
differences payments Total
Company GBPm GBPm GBPm
------------------------------------------------------- ------------ ----------- -----
At 30 June 2021 - 25.1 25.1
Charged to the statement of comprehensive income - (6.9) (6.9)
------------------------------------------------------- ------------ ----------- -----
At 30 June 2022 - 18.2 18.2
Charged to the statement of comprehensive income - (6.6) (6.6)
------------------------------------------------------- ------------ ----------- -----
At 30 June 2023 - 11.6 11.6
------------------------------------------------------- ------------ ----------- -----
19) Fair value of financial instruments
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 committee 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 the
financial year.
The fair value hierarchy of financial instruments which are
carried at fair value at year end is summarised below:
2023 2022
-------------------------- --------------------------
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Financial assets
Investment securities 112.3 88.8 28.8 229.9 158.8 82.7 23.6 265.1
Financial assets measured
at FVTPL - 55.8 - 55.8 - 32.3 - 32.3
Non-current financial assets
at fair value - 14.9 39.2 54.1 - - 39.3 39.3
--------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
112.3 159.5 68.0 339.8 158.8 115.0 62.9 336.7
--------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Financial liabilities
Third-party interests in
consolidated funds 36.0 9.6 10.6 56.2 58.4 6.3 8.3 73.0
Derivative financial instruments - 0.2 - 0.2 - 5.2 - 5.2
--------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
36.0 9.8 10.6 56.4 58.4 11.5 8.3 78.2
--------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Transfers between levels
The Group recognises transfers into and transfers out of fair
value hierarchy levels at each reporting period based on
assessments of price inputs used in the valuation of financial
assets. There were no transfers between level 1, level 2 and level
3 of the fair value hierarchy during the year.
Fair value measurements using significant unobservable inputs
(level 3)
The following table presents the changes in level 3 items for
the years ended 30 June 2023 and 2022:
Non-current Third-party
financial interests
Investment assets at in consolidated
securities fair value funds
GBPm GBPm GBPm
---------------------------------------------- ----------- ----------- ----------------
At 30 June 2021 42.4 34.0 16.9
Additions - 1.9 -
Disposals (25.5) (1.5) (10.7)
Transfers out (1.5) - -
Unrealised gains recognised in finance income 4.4 3.5 2.1
Unrealised gains recognised in reserves 3.8 1.4 -
---------------------------------------------- ----------- ----------- ----------------
At 30 June 20 22 23.6 39.3 8.3
---------------------------------------------- ----------- ----------- ----------------
Additions 2.5 2.9 1.2
Disposals (9.1) (5.0) (3.8)
Unrealised gains recognised in finance income 12.0 2.0 4.9
Unrealised losses recognised in reserves (0.2) - -
---------------------------------------------- ----------- ----------- ----------------
At 30 June 20 23 28.8 39.2 10.6
---------------------------------------------- ----------- ----------- ----------------
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
include comparison to recent arm's length transactions, market
approach making reference to other instruments that are
substantially the same, discounted cash flow analysis, enterprise
valuation and net assets approach. These techniques may include a
number of assumptions relating to variables such as interest rate
and price earnings multiples. Changes in assumptions relating to
these variables could positively or negatively impact the reported
fair value of these instruments. When determining the inputs into
the valuation techniques used, priority is given to publicly
available prices from independent sources when available, but
overall the source of pricing is chosen with the objective of
arriving at a fair value measurement that reflects the price at
which an orderly transaction would take place between market
participants on the measurement date.
The fair value estimates are made at a specific point in time,
based upon available market information and judgements about the
financial instruments, including estimates of the timing and amount
of expected future cash flows. Such estimates could include a
marketability adjustment to reflect illiquidity and/or
non-transferability that could result from offering for sale at one
time the Group's entire holdings of a particular financial
instrument.
The following tables show the valuation techniques and the
significant unobservable inputs used to estimate the fair value of
level 3 investments as at 30 June 2023 and 2022, and the associated
sensitivity to changes in unobservable inputs to a reasonable
alternative.
2023 Significant Change in
Asset class and valuation Fair value unobservable Range of Sensitivity fair value
technique GBPm inputs estimates factor GBPm
----------------------------- ----------- --------------- ---------- ----------- -----------
Unquoted securities
Market multiple and discount 6.4 EBITDA multiple 15x +/- 1x +/- 0.6
Marketability
adjustment 30% +/- 5% -/+ 0.7
--------------- ---------- ----------- -----------
Discounted cash flow 32.3 Discount rate 10%-17% +/- 1% -/+ 3.0
----------------------------- -----------
Marketability
adjustment 10%-54% +/- 5% -/+ 2.8
----------------------------- ----------- --------------- ---------- ----------- -----------
Unquoted funds
Net assets approach 29.3 NAV(1) 1x +/- 5% +/- 1.5
----------------------------- ----------- --------------- ---------- ----------- -----------
Total level 3 investments 68.0
----------------------------- ----------- --------------- ---------- ----------- -----------
2022 Significant Change in
Asset class and valuation Fair value unobservable Range of Sensitivity fair value
technique GBPm inputs estimates factor GBPm
----------------------------- ----------- ----------------- ---------- ----------- -----------
Unquoted securities
Market multiple and discount 6.2 EBITDA multiple 14x +/- 1x +/- 0.5
Marketability
adjustment 30% +/- 5% -/+ 0.4
----------------- ---------- ----------- -----------
Discounted cash flow 26.3 Discount rate 10%-20% +/- 1% -/+ 3.6
----------------------------- -----------
Marketability
adjustment 10%-60% +/- 5% -/+ 1.5
----------------------------- ----------- ----------------- ---------- ----------- -----------
Unquoted funds
Net assets approach 30.4 NAV(1) 1x +/- 5% +/- 1.5
----------------------------- ----------- ----------------- ---------- ----------- -----------
Total level 3 investments 62.9
----------------------------- ----------- --------- ------ ----------
1. NAV priced assets include seed capital investments whose
value is determined by the fund administrator using unobservable
inputs. The significant unobservable inputs applied include EBITDA,
market multiples, last observable vendor price and discount
rates.
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.
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
30 June 2023 and 2022.
20) Seed capital investments
The Group considers itself a sponsor of an investment fund when
it facilitates the establishment of a fund in which the Group is
the investment manager. The Group ordinarily provides seed capital
in order to provide initial scale and facilitate marketing of the
funds to third-party investors. Aggregate interests held by the
Group include seed capital, management fees and performance fees.
The Group generates management and performance fee income from
managing the assets on behalf of third-party investors.
The movements of seed capital investments and related items
during the year are as follows:
Non-current
Financial Investment financial
assets securities Other Third-party assets
Financial measured (relating (relating interests measured
assets at to to in at
held fair consolidated consolidated consolidated fair
for sale value funds)1 funds)2 funds value(3) Total
Group GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- --------- --------- ------------- ------------- ------------- ----------- ------
Carrying amount at 30
June 2021 42.4 41.0 318.1 9.6 (105.7) 31.4 336.8
Reclassification:
Financial assets held
for sale to consolidated
funds (39.1) - 40.5 0.4 (1.8) - -
Consolidated funds to
FVTPL - 39.1 (59.5) 0.1 20.3 - -
Additions - 5.5 - - - 1.9 7.4
Disposals (0.1) (44.9) (25.5) - 10.2 (1.5) (61.8)
Fair value movement (3.2) (8.4) (8.5) 1.0 4.0 4.7 (10.4)
---------------------------- --------- --------- ------------- ------------- ------------- ----------- ------
Carrying amount at 30
June 2022 - 32.3 265.1 11.1 (73.0) 36.5 272.0
Additions - 23.0 22.8 - (1.4) 19.5 63.9
Disposals - - (23.3) - 3.7 (5.0) (24.6)
Fair value movement - 0.5 (34.7) (0.5) 14.5 0.4 (19.8)
---------------------------- --------- --------- ------------- ------------- ------------- ----------- ------
Carrying amount at 30
June 2023 - 55.8 229.9 10.6 (56.2) 51.4 291.5
---------------------------- --------- --------- ------------- ------------- ------------- ----------- ------
1. Investment securities in consolidated funds are measured at FVTPL.
2. Relates to cash and other assets in consolidated funds that
are not investment securities, see note 20(c).
3. Excludes GBP2.7 million of other non-current financial assets
measured at fair value that are not classified as seed capital.
a) Financial assets measured at fair value through profit or
loss
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 recognised as financial assets and measured at FVTPL.
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 a financial asset, 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.
Investments cease to be classified as consolidated funds 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. No such fund was transferred to the FVTPL category
during the year (FY2022: three funds with an aggregate value of
GBP39.1 million were transferred to the FVTPL category).
FVTPL investments at 30 June 2023 comprise shares held in debt
and equity funds as follows:
2023 2022
GBPm GBPm
---------------------------------------- ----- -----
Equity funds 29.6 15.5
Debt funds 26.2 16.8
---------------------------------------- ----- -----
Financial assets measured at fair value 55.8 32.3
---------------------------------------- ----- -----
Included within finance income are gains of GBP2.6 million
(FY2022: losses of GBP12.5 million) on the Group's financial assets
measured at FVTPL.
b) Non-current financial assets measured at fair value
Non-current financial asset investments relate to the Group's
holding in closed-end funds and are measured at FVTPL.
2023 2022
GBPm GBPm
------------------------------------------------------- ----- -----
Real estate funds 0.9 1.5
Infrastructure funds 22.0 24.1
Other funds 28.5 10.9
------------------------------------------------------- ----- -----
Non-current financial assets measured at fair value(1) 51.4 36.5
------------------------------------------------------- ----- -----
1. Excludes GBP2.7 million (30 June 2022: GBP2.8 million) of
other non-current financial assets measured at fair value that are
not classified as seed capital.
Included within finance income are gains of GBP1.4 million
(FY2022: gains of GBP4.2 million) on the Group's non-current
financial assets measured at fair value.
c) Consolidated funds
The Group has consolidated 17 investment funds as at 30 June
2023 (30 June 2022: 18 investment funds), over which the Group is
deemed to have control (refer to note 25). 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.
2023 2022
GBPm GBPm
-------------------------------------------- ------ ------
Investment securities1 229.9 265.1
Cash and cash equivalents 10.3 10.0
Other2 0.3 1.1
Third-party interests in consolidated funds (56.2) (73.0)
-------------------------------------------- ------ ------
Consolidated seed capital investments 184.3 203.2
-------------------------------------------- ------ ------
1. Investment securities represent trading securities held by
consolidated investment funds and are measured at FVTPL. Note 25
provides a list of the consolidated funds by asset class, and
further detailed information at the security level is available in
the individual fund financial statements.
2. Other includes trade receivables, trade payables and
accruals.
The maximum exposure to loss is the carrying amount of the
assets held. The Group has not provided financial support or
otherwise agreed
to be responsible for supporting any consolidated or
unconsolidated funds financially.
Included within the consolidated statement of comprehensive
income are net losses of GBP15.3 million (FY2022: net losses of
GBP40.5 million) relating to the Group's share of the results of
the individual statements of comprehensive income for each of the
consolidated funds, as follows:
2023 2022
GBPm GBPm
------------------------------------------------------ ------ ------
Investment income 11.0 5.7
Fair value losses on investment securities (44.3) (61.3)
Change in third-party interests in consolidated funds 19.3 16.5
Audit fees (0.2) (0.2)
Other expenses (1.1) (1.2)
------------------------------------------------------ ------ ------
Net losses on consolidated funds (15.3) (40.5)
------------------------------------------------------ ------ ------
Included in the Group's cash generated from operations is GBP0.1
million cash utilised in operations (FY2022: GBP2.8 million cash
utilised in operations) relating to consolidated funds.
As of 30 June 2023, the Group's consolidated funds were
domiciled in Guernsey, Luxembourg, Saudi Arabia and the United
States.
21) Financial instrument risk management
Group
The Group is subject to strategic and business, client,
investment, treasury and operational risks throughout its business,
as discussed in the Risk management section. This note discusses
the Group's exposure to and management of the following principal
risks which arise from the financial instruments it uses: credit
risk, liquidity risk, interest rate risk, foreign exchange risk and
price risk. Where the Group holds units in investment funds,
classified either as financial assets measured at FVTPL or
non-current financial assets, the related financial instrument risk
disclosures in the note below categorise exposures based on the
Group's direct interest in those funds without looking through to
the nature of underlying securities.
Risk management is the ultimate responsibility of the Board, as
noted in the Risk management section.
Capital management
It is the Group's policy that all entities within the Group have
sufficient capital to meet regulatory and working capital
requirements and it conducts regular reviews of its capital
requirements relative to its capital resources.
Ashmore has been reporting under IFPR since 1 January 2022 and
applies the ICARA approach to the calculation of the capital and
liquidity requirement for its UK regulated entity, AIML.
The Board has determined that the capital required to support
the Group's activities, including its regulatory requirements, is
GBP80.6 million. The equivalent figure as at 30 June 2022,
calculated under the previous ICAAP approach, was GBP125.2
million.
Ashmore holds total capital resources of GBP704.8 million as at
30 June 2023, providing an excess of GBP624.2 million over the
Group capital requirement (30 June 2022: GBP788.7 million,
providing an excess of GBP663.5 million over the Group capital
requirement).
Credit risk
The Group has exposure to credit risk from its normal activities
where the risk is that a counterparty will be unable to pay in full
amounts when due.
Exposure to credit risk is monitored on an ongoing basis by
senior management and the Group's Risk Management and Control
function. The Group has a counterparty and cash management policy
in place which, in addition to other controls, restricts exposure
to any single counterparty by setting exposure limits and requiring
approval and diversification of counterparty banks and other
financial institutions. The Group's maximum exposure to credit risk
is represented by the carrying value of its financial assets
measured at amortised cost, excluding prepayments. The table below
lists financial assets subject to credit risk.
2023 2022
Notes GBPm GBPm
---------------------------- ----- ----- -----
Trade and other receivables 17 66.0 70.8
Cash and cash equivalents 478.6 552.0
---------------------------- ----- ----- -----
Total 544.6 622.8
---------------------------- ----- ----- -----
The Group's cash and cash equivalents, comprising short-term
deposits with banks and liquidity funds, are predominantly held
with counterparties with credit ratings ranging from A- to AAAm as
at 30 June 2023 (30 June 2022: A to AAAm). As at 30 June 2023, the
Group held GBP56.8 million (30 June 2022: GBP225.7 million) in the
Ashmore Global Liquidity Fund.
All trade and other receivables are considered to be fully
recoverable at year end. They include fee debtors that arise
principally within the Group's investment management business. They
are monitored regularly and, historically, default levels have been
insignificant. There is no significant concentration of credit risk
in respect of fees owing from clients.
Group
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting obligations associated with its financial
liabilities that are settled by delivering cash or other financial
assets.
In order to manage liquidity risk, there is a Group liquidity
policy to ensure that there is sufficient access to funds to cover
all forecast committed requirements for the next 12 months.
The table below summarises the maturity profile of the Group's
financial liabilities at 30 June 2023 and 30 June 2022 based on
contractual undiscounted payments:
At 30 June 2023
More
Within than
1 year 1-5 years 5 years Total
GBPm GBPm GBPm GBPm
--------------------------------- ------- --------- --------- -----
Current trade and other payables 24.2 - - 24.2
--------------------------------- ------- --------- --------- -----
Lease liabilities 2.4 3.9 - 6.3
--------------------------------- ------- --------- --------- -----
Total 26.6 3.9 - 30.5
--------------------------------- ------- --------- --------- -----
At 30 June 2022
More
Within than
1 year 1-5 years 5 years Total
GBPm GBPm GBPm GBPm
--------------------------------- ------- --------- --------- -----
Current trade and other payables 36.4 - - 36.4
--------------------------------- ------- --------- --------- -----
Lease liabilities 2.6 6.0 0.2 8.8
--------------------------------- ------- --------- --------- -----
Total 39.0 6.0 0.2 45.2
--------------------------------- ------- --------- --------- -----
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of financial instruments will fluctuate because of
changes in market interest rates.
The principal interest rate risk is the risk that the Group will
sustain a reduction in interest income through adverse movements in
interest rates. This relates to deposits with banks and liquidity
funds held in the ordinary course of business. The Group has a cash
management policy which monitors cash levels and returns within set
parameters on a continuing basis.
Bank and similar deposits (including liquidity funds) held at
year end are shown on the consolidated balance sheet as cash and
cash equivalents. The effective interest earned on bank and similar
deposits during the year is given in the table below:
2023 2022
% %
---------------------------------------- ---- ----
Deposits with banks and liquidity funds 3.22 0.41
---------------------------------------- ---- ----
At 30 June 2023, if interest rates over the year had been 50
basis points higher/lower with all other variables held constant,
profit before tax
for the year would have been GBP2.5 million higher/lower
(FY2022: GBP2.5 million higher/lower), mainly as a result of
higher/lower interest on
cash balances. An assumption that the fair value of assets and
liabilities will not be affected by a change in interest rates was
used in the model to calculate the effect on profit before tax.
In addition, the Group is indirectly exposed to interest rate
risk where the Group holds seed capital investments in funds that
invest in debt securities.
Foreign exchange risk
Foreign exchange risk is the risk that the fair value or future
cash flows of financial instruments will fluctuate because of
changes in foreign exchange rates.
The Group's revenue is almost entirely denominated in US
dollars, while the majority of the Group's costs are denominated in
Sterling. Consequently, the Group has an exposure to movements in
the GBP:USD exchange rate. In addition, the Group operates
globally, which means that it may enter into contracts and other
arrangements denominated in local currencies in various countries.
The Group also holds a number of seed capital investments
denominated mainly in US dollars, Colombian pesos and Indonesian
rupiah.
The Group's policy is to hedge a proportion of the Group's
revenue by using a combination of forward foreign exchange
contracts and options for a period of up to two years forward. The
Group also sells US dollars at spot rates when opportunities
arise.
The table below shows the Group's sensitivity to a 1% exchange
movement in the US dollar, Colombian peso, Indonesian rupiah and
the Euro, net of hedging activities.
2023 2022
---------------- ----------------
Impact Impact
on on
profit Impact profit Impact
before on before on
tax equity tax equity
Foreign currency sensitivity test GBPm GBPm GBPm GBPm
---------------------------------- ------- ------- ------- -------
US dollar +/- 1% 0.4 2.5 0.4 3.9
Colombian peso +/- 1% - 0.2 0.1 0.2
Indonesian rupiah +/- 1% - 0.1 - 0.1
Euro +/- 1% 0.1 0.1 - -
---------------------------------- ------- ------- ------- -------
Price risk
Price risk is the risk that the fair value or future cash flows
of financial instruments will fluctuate because of market
changes.
Seed capital
The Group is exposed to the risk of changes in market prices in
respect of seed capital investments. Such price risk is borne by
the Group directly through interests in financial assets measured
at fair value or indirectly either through line-by-line
consolidation of underlying financial performance and positions
held in certain funds. Details of seed capital investments held are
given in note 20.
The Group has procedures defined by the Board governing the
appraisal, approval and monitoring of seed capital investments.
At 30 June 2023, a 5% movement in the fair value of these
investments would have a GBP14.6 million (FY2022: GBP13.6 million)
impact on net assets and profit before tax.
Management and performance fees
The Group is also indirectly exposed to price risk in connection
with the Group's management fees, which are based on a percentage
of value of AuM, and fees based on performance. Movements in market
prices, exchange and interest rates could cause the AuM to
fluctuate, which in turn could affect fees earned. Performance fee
revenues could also be reduced depending upon market
conditions.
Management and performance fees are diversified across a range
of investment themes and are not measurably correlated to any
single market index in Emerging Markets. In addition, the policy of
having funds with year ends staged throughout the financial year
has meant that in periods of steep market decline, some performance
fees have still been recorded. The profitability impact is likely
to be less than this, as cost mitigation actions would apply,
including the reduction of the variable compensation paid to
employees.
Using the year end AuM level of US$55.9 billion and applying the
year's average net management fee rate of 38bps, a 5% movement in
AuM would have a US$10.6 million impact, equivalent to GBP8.3
million using a year end exchange rate of 1.2714, on management fee
revenues (FY2022: US$64.0 billion and applying the year's average
net management fee rate of 39bps, a 5% movement in AuM would have a
US$12.5 million impact, equivalent to GBP10.3 million using a year
end exchange rate of 1.2145, on management fee revenues).
Hedging activities
The Group uses forward and option contracts to hedge its
exposure to foreign currency risk. These hedges, which have been
assessed as effective cash flow hedges as at 30 June 2023, protect
a proportion of the Group's revenue cash flows from foreign
exchange movements. The cumulative fair value of the outstanding
foreign exchange hedges asset at 30 June 2023 was GBP0.2 million
and is included within the Group's derivative financial instruments
(30 June 2022: GBP5.2 million foreign exchange hedges liability
included in derivative financial instruments).
Group
The notional and fair values of foreign exchange hedging
instruments were as follows:
2023 2022
------------------------ ------------------------
Fair value Fair value
Notional assets/ Notional assets/
amount (liabilities) amount (liabilities)
US$m GBPm US$m GBPm
----------------------------------------- -------- -------------- -------- --------------
Cash flow hedges
Foreign exchange nil-cost option collars 40.0 0.2 100.0 (5.2)
----------------------------------------- -------- -------------- -------- --------------
40.0 0.2 100.0 (5.2)
----------------------------------------- -------- -------------- -------- --------------
The maturity profile of the Group's outstanding hedges is shown
below.
2023 2022
Notional amount of option collars maturing: US$m US$m
-------------------------------------------- ----- -----
Within 6 months 30.0 40.0
Between 6 and 12 months 10.0 40.0
Later than 12 months - 20.0
-------------------------------------------- ----- -----
40.0 100.0
-------------------------------------------- ----- -----
When hedges are assessed as effective, intrinsic value gains and
losses are initially recognised in other comprehensive income and
later reclassified to comprehensive income as the corresponding
hedged cash flows crystallise. Time value in relation to the
Group's hedges is excluded from being part of the hedging item and,
as a result, the net unrealised loss related to the time value of
the hedges is recognised in the consolidated statement of
comprehensive income for the year.
An intrinsic value gain of GBP4.9 million (FY2022: GBP6.0
million loss) on the Group's hedges has been recognised through
other comprehensive income and a GBP0.5 million intrinsic value
gain (FY2022: GBP0.5 million intrinsic value loss) was reclassified
from equity to the statement of comprehensive income in the
year.
Included within the net realised and unrealised hedging gain of
GBP4.4 million (note 7) recognised at 30 June 2023 (30 June 2022:
GBP6.3 million gain) are:
- a GBP0.5 million gain in respect of foreign exchange hedges
covering net management fee income for the financial year ending 30
June 2023 (FY2022: GBP0.5 million loss); and
- a GBP3.9 million gain in respect of crystallised foreign
exchange contracts (FY2022: GBP6.8 million gain).
Company
The risk management processes of the Company, including those
relating to the specific risk exposures covered below, are aligned
with those of the Group as a whole unless stated otherwise.
In addition, the risk definitions that apply to the Group are
also relevant for the Company.
Credit risk
The Company's maximum exposure to credit risk is represented by
the carrying value of its financial assets measured at amortised
cost, excluding prepayments. The table below lists financial assets
subject to credit risk.
2023 2022
Notes GBPm GBPm
---------------------------- ----- ----- -----
Cash and cash equivalents 327.7 159.7
Trade and other receivables 17 282.5 454.8
---------------------------- ----- ----- -----
Total 610.2 614.5
---------------------------- ----- ----- -----
The Company's cash and cash equivalents comprise short-term
deposits held with banks and liquidity funds which have credit
ratings ranging from A- to AAAm as at 30 June 2023 (30 June 2022: A
to AAAm).
All trade and other receivables are considered to be fully
recoverable and none were overdue at year end (30 June 2022: none
overdue).
Liquidity risk
The Company's exposure to liquidity risk is not considered to be
material and, therefore, no further information is provided.
Details on other commitments are provided in note 29.
Company
Interest rate risk
The principal interest rate risk for the Company is that it
could sustain a reduction in interest revenue from bank deposits
held in the ordinary course of business through adverse movements
in interest rates.
Bank and similar deposits (including liquidity funds) held at
year end are shown on the Company's balance sheet as cash and cash
equivalents. The effective interest earned on bank and similar
deposits during the year is given in the table below:
2023 2022
% %
---------------------------------------- ---- ----
Deposits with banks and liquidity funds 4.17 0.46
---------------------------------------- ---- ----
At 30 June 2023, if interest rates over the year had been 50
basis points higher/lower with all other variables held constant,
post-tax profit for the year would have been GBP1.2 million
higher/lower (FY2022: GBP0.6 million higher/lower), mainly as a
result of higher/lower interest on cash balances. An assumption
that the fair value of assets and liabilities will not be affected
by a change in interest rates was used in the model to calculate
the effect on post-tax profits.
Foreign exchange risk
The Company is exposed primarily to foreign exchange risk in
respect of US dollar cash balances and US dollar-denominated
intercompany balances. However, such risk is not hedged by the
Company.
At 30 June 2023, if the US dollar had strengthened/weakened by
1% against Sterling with all other variables held constant, profit
before tax for the year would have increased/decreased by GBP2.4
million (FY2022: increased/decreased by GBP3.6 million).
22) Share capital
Authorised share capital
2023 2022
2023 Nominal 2022 Nominal
Number of value Number value
Group and Company shares GBP'000 of shares GBP'000
------------------------------ ----------- -------- ----------- --------
Ordinary shares of 0.01p each 900,000,000 90 900,000,000 90
------------------------------ ----------- -------- ----------- --------
Issued share capital - allotted and fully paid
2023 2022
2023 Nominal 2022 Nominal
Number of value Number value
Group and Company shares GBP'000 of shares GBP'000
------------------------------ ----------- -------- ----------- --------
Ordinary shares of 0.01p each 712,740,804 71 712,740,804 71
------------------------------ ----------- -------- ----------- --------
All the above ordinary shares represent equity of the Company
and rank pari passu in respect of participation and voting
rights.
At 30 June 2023, there were equity-settled share awards issued
under the Omnibus Plan totalling 39,389,867 (30 June 2022:
40,688,833) shares that have release dates ranging from July 2023
to September 2027. Further details are provided in note 10.
23) 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 30 June 2023, the
EBT owned 50,834,683 (30 June 2022: 55,512,301) ordinary shares of
0.01p with a nominal value of GBP5,083 (30 June 2022: GBP5,551) and
shareholders' funds are reduced by GBP164.2 million (30 June 2022:
GBP187.6 million) in this respect. The EBT is periodically funded
by the Company for these purposes.
24) Trade and other payables
Group Group Company Company
2023 2022 2023 2022
GBPm GBPm GBPm GBPm
------------------------------- ----- ----- ------- -------
Current
Trade payables 13.3 15.8 3.0 2.4
Accruals and provisions 10.9 20.6 4.5 11.4
Amounts due to subsidiaries - - 20.5 29.7
------------------------------- ----- ----- ------- -------
Total trade and other payables 24.2 36.4 28.0 43.5
------------------------------- ----- ----- ------- -------
25) Interests in subsidiaries
Operating subsidiaries held by the Company
There were no movements in investments in subsidiaries held by
the Company during the year.
2023 2022
Company GBPm GBPm
------------------------- ----- -----
Cost
------------------------- ----- -----
At 30 June 2023 and 2022 19.9 19.9
------------------------- ----- -----
In the opinion of the Directors, the following subsidiary
undertakings principally affected the Group's results or financial
position at 30 June 2023. A full list of the Group's subsidiaries
and all related undertakings is disclosed in note 33.
Country
of incorporation/ % of equity
formation shares
and principal held
place by the
Name of operation Group
---------------------------------------------------- ------------------- -----------
Ashmore Investments (UK) Limited England 100.00
Ashmore Investment Management Limited England 100.00
Ashmore Investment Advisors Limited England 100.00
Ashmore Management Company Colombia SAS Colombia 59.26
Ashmore CAF-AM Management Company SAS Colombia 53.09
Ashmore Avenida Investments (Real Estate) LLP Colombia 56.00
Ashmore Management Company Limited Guernsey 100.00
Ashmore Investment Management India LLP India 100.00
PT Ashmore Asset Management Indonesia Tbk Indonesia 60.04
Ashmore Investment Management (Ireland) Limited Ireland 100.00
Ashmore Japan Co. Limited Japan 100.00
Ashmore Investments (Holdings) Limited Mauritius 100.00
Saudi
Ashmore Investments Saudi Arabia Arabia 100.00
Ashmore Investment Management (Singapore) Pte. Ltd. Singapore 100.00
Ashmore Investment Management (US) Corporation USA 100.00
Ashmore Investment Advisors (US) Corporation USA 100.00
---------------------------------------------------- ------------------- -----------
Consolidated funds
The Group consolidated the following 17 investment funds as at
30 June 2023 (30 June 2022: 18 investment funds) over which the
Group is deemed to have control:
% of net
Country asset
of incorporation/ value
principal held
Type of place of by the
Name fund operation Group
-------------------------------------------------- --------------- ------------------- --------
Ashmore Emerging Markets Debt and Currency Fund
Limited Alternatives Guernsey 57.72
Ashmore SICAV Emerging Markets Corporate Debt Corporate
ESG Fund debt Luxembourg 100.00
Ashmore SICAV Emerging Markets Equity ESG Fund Equity Luxembourg 99.36
Ashmore SICAV Emerging Markets Indonesian Equity
Fund Equity Luxembourg 100.00
Ashmore SICAV Emerging Markets Global Small-Cap
Equity Fund Equity Luxembourg 47.55
Ashmore SICAV Emerging Markets Middle East Equity
Fund Equity Luxembourg 88.78
Ashmore SICAV Emerging Markets IG Total Return Blended
Fund debt Luxembourg 100.00
Ashmore SICAV Emerging Markets Total Return ESG Blended
Fund debt Luxembourg 99.77
Ashmore SICAV Emerging Markets Sovereign Debt External
ESG Fund debt Luxembourg 100.00
Ashmore SICAV Emerging Markets China Bond Fund Local currency Luxembourg 100.00
Ashmore Saudi Equity Fund Equity Saudi Arabia 69.29
Ashmore Emerging Markets Active Equity Fund Equity USA 73.14
Ashmore Emerging Markets Equity ESG Fund Equity USA 100.00
Ashmore Emerging Markets Short Duration Select
Fund Equity USA 100.00
Ashmore Emerging Markets Investment Grade Income Corporate
Fund debt USA 100.00
Corporate
Ashmore Emerging Markets Corporate Debt ESG Fund debt USA 100.00
Ashmore Emerging Markets Local Currency Bond Fund Local currency USA 78.91
-------------------------------------------------- --------------- ------------------- --------
26) Investment in associates
The Group held an interest in the following associate as at 30
June 2023, over which it continues to have significant
influence:
Country of
incorporation/ % of equity
formation shares
and principal held by
Name Type Nature of business place of operation the Group
-------------------------------- ---------- ---------------------- -------------------- -----------
Taiping Fund Management Company Associate Investment management China 5.23%
-------------------------------- ---------- ---------------------- -------------------- -----------
The movement in the carrying value of investments in associates
for the year is provided below:
2023 2022
Associates GBPm GBPm
----------------------------- ----- -----
At the beginning of the year 2.1 0.9
Reclassification - (0.2)
Gain on dilution - 1.3
Share of profit for the year 0.5 -
Foreign exchange revaluation (0.3) 0.1
----------------------------- ----- -----
At the end of the year 2.3 2.1
----------------------------- ----- -----
The summarised financial information for the associate is shown
below.
2023 2022
Associates GBPm GBPm
------------------------------------- ------- ------
Total assets 53.2 54.5
Total liabilities (10.0) (13.3)
------------------------------------- ------- ------
Net assets 43.2 41.2
Group's share of net assets 2.3 2.1
------------------------------------- ------- ------
Revenue for the year 23.6 23.5
Profit for the year 9.6 0.8
Group's share of profit for the year 0.5 -
------------------------------------- ------- ------
The carrying value of the investments in associates represents
the cost of acquisition subsequently adjusted for share of profit
or loss
and other comprehensive income or loss. No permanent impairment
is believed to exist relating to the associate as at 30 June 2023.
The Group had no undrawn capital commitments (30 June 2022: GBPnil)
to investment funds managed by the associate.
27) Interests in structured entities
The Group has interests in structured entities as a result of
the management of assets on behalf of its clients. Where the Group
holds a direct interest in a closed-ended fund, private equity fund
or open-ended pooled fund such as a SICAV, the interest is
accounted for either as a consolidated structured entity or as a
financial asset, depending on whether the Group has control over
the fund or not.
The Group's interest in structured entities is reflected in the
Group's AuM. The Group is exposed to movements in AuM of structured
entities through the potential loss of fee income as a result of
client withdrawals. Outflows from funds are dependent on market
sentiment, asset performance and investor considerations. Further
information on these risks can be found in the Strategic
report.
Considering the potential for changes in AuM of structured
entities, management has determined that the Group's unconsolidated
structured entities include segregated mandates and pooled funds
vehicles. Disclosure of the Group's exposure to unconsolidated
structured entities has been made on this basis.
The reconciliation of AuM reported by the Group within
unconsolidated structured entities is shown below.
Less: AuM within
AuM within unconsolidated
consolidated structured
Total AuM funds entities
US$bn US$bn US$bn
------------- --------- ------------- ---------------
30 June 2022 64.0 0.3 63.7
------------- --------- ------------- ---------------
30 June 2023 55.9 0.3 55.6
------------- --------- ------------- ---------------
Included in the Group's consolidated management fees of GBP185.4
million (FY2022: GBP247.0 million) are management fees amounting to
GBP184.2 million (FY2022: GBP246.0 million) earned from
unconsolidated structured entities.
The table below shows the carrying values of the Group's
interests in unconsolidated structured entities, recognised in the
Group balance sheet, which are equal to the Group's maximum
exposure to loss from those interests.
2023 2022
GBPm GBPm
---------------------------- ----- -----
Management fees receivable 37.7 47.6
Trade and other receivables 1.3 0.8
Seed capital investments* 107.2 68.8
---------------------------- ----- -----
Total exposure 146.2 117.2
---------------------------- ----- -----
* Comprise financial assets measured at fair value and
non-current financial assets measured at fair value (refer to note
20).
The main risk the Group faces from its beneficial interests in
unconsolidated structured entities arises from a potential decrease
in the fair value of seed capital investments. The Group's
beneficial interests in seed capital investments are disclosed in
note 20. Note 21 includes further information on the Group's
exposure to market risk arising from seed capital investments.
28) 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 - Group and Company
The compensation paid to or payable to key management personnel
is shown below:
2023 2022
GBPm GBPm
--------------------------------------- ----- -----
Short-term benefits 0.8 0.8
Defined contribution pension costs - -
Share-based payment benefits (note 10) 0.4 0.2
--------------------------------------- ----- -----
1.2 1.0
--------------------------------------- ----- -----
Short-term benefits include salary and fees, benefits and cash
bonus.
Share-based payment benefits represent the cost of
equity-settled awards charged to the statement of comprehensive
income.
Details of the remuneration of Directors are given in the
Remuneration report.
During the year, there were no other transactions entered into
with key management personnel (FY2022: none). Aggregate key
management personnel interests in consolidated funds at 30 June
2023 were GBP44.5 million (30 June 2022: GBP62.7 million).
Transactions with subsidiaries - Company
Details of transactions between the Company and its subsidiaries
are shown below:
2023 2022
GBPm GBPm
----------------------------- ----- -----
Transactions during the year
Management fees 59.7 67.2
Net dividends 145.2 174.0
Loans repaid by subsidiaries 110.5 183.8
----------------------------- ----- -----
Amounts receivable or payable to subsidiaries are disclosed in
notes 17 and 24 respectively.
Transactions with Ashmore funds - Group
During the year, the Group received GBP64.0 million of gross
management fees and performance fees (FY2022: GBP96.2 million) from
the 104 funds (FY2022: 99 funds) it manages and which are
classified as related parties. As at 30 June 2023, the Group had
receivables due from funds of GBP4.6 million (30 June 2022: GBP5.8
million) that are classified as related parties.
Transactions with the EBT - Group and Company
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
and the Company. As at 30 June 2023, the loan outstanding was
GBP150.7 million (30 June 2022: GBP163.7 million).
Transactions with The Ashmore Foundation - Group and Company
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 to the countries
and communities. The Group donated GBP0.5 million to the Foundation
during the year (FY2022: GBP0.6 million).
29) Commitments
The Group has undrawn investment commitments relating to seed
capital investments as follows:
2023 2022
Group GBPm GBPm
----------------------------------------------------- ----- -----
Ashmore Andean Fund II, LP 0.1 0.1
Ashmore Avenida Colombia Real Estate Fund I (Cayman)
LP 0.1 0.1
Ashmore I - CAF Colombian Infrastructure Senior Debt
Fund 5.7 6.6
Fondo Ashmore Andino III - FCP 3.0 -
Ashmore KCH HealthCare Fund II - 1.2
Ashmore KCH HealthCare LLC - 4.4
----------------------------------------------------- ----- -----
Total undrawn investment commitments 8.9 12.4
----------------------------------------------------- ----- -----
Company
The Company has undrawn loan commitments to other Group entities
totalling GBP482.5 million (30 June 2022: GBP394.1 million) to
support their investment activities but has no investment
commitments of its own (30 June 2022: none).
30) Contingent assets and liabilities
The Company and its subsidiaries can be party to legal claims
arising in the normal course of business. The Directors do not
anticipate that the outcome of any such potential proceedings and
claims will have a material adverse effect on the Group's financial
position and at present there are no such claims where their
financial impact can be reasonably estimated. There are no other
material contingent assets or liabilities.
31) Non-controlling interests
The Group's material NCI as at 30 June 2023 was held in PT
Ashmore Asset Management Indonesia Tbk (Ashmore Indonesia). Set out
below is summarised financial information and the amounts disclosed
are before intercompany eliminations.
40% NCI
Ashmore Indonesia
--------------------
2023 2022
Summarised balance sheet GBPm GBPm
--------------------------------------------- --------- ---------
Total assets 19.8 23.0
Total liabilities (4.4) (6.4)
--------------------------------------------- --------- ---------
Net assets 15.4 16.6
--------------------------------------------- --------- ---------
Non-controlling interests* 6.1 13.6
--------------------------------------------- --------- ---------
Summarised statement of comprehensive income
--------------------------------------------- --------- ---------
Net revenue 10.9 12.3
Profit for the period 5.1 5.9
Other comprehensive income/(loss) (0.9) 1.6
Total comprehensive income 4.2 7.5
--------------------------------------------- --------- ---------
Profit allocated to NCI 1.6 3.0
--------------------------------------------- --------- ---------
Dividends paid to NCI 2.3 2.3
--------------------------------------------- --------- ---------
Summarised cash flows
--------------------------------------------- --------- ---------
Cash flows from operating activities 4.6 6.5
Cash flows used in investing activities - (3.6)
Cash flows used in financing activities (6.3) (6.3)
--------------------------------------------- --------- ---------
Net decrease in cash and cash equivalents (1.7) (3.4)
--------------------------------------------- --------- ---------
* GBP6.8 million of historical NCI was reclassified to retained earnings in the year.
32) Post-balance sheet events
There are no post-balance sheet events that require adjustment
or disclosure in the Group consolidated financial statements.
33) Subsidiaries and related undertakings
The following is a full list of the Ashmore Group plc
subsidiaries and related undertakings as at 30 June 2023, along
with the registered address and the percentage of equity owned by
the Group. Related undertakings comprise significant holdings in
associated undertakings, joint ventures and Ashmore sponsored
public funds in which the Group owns greater than 20% interest.
% voting Registered address and
Name Classification interest place of incorporation
------------------------------------------------- --------------- --------- ----------------------------
Ashmore Investments (UK) Limited(1) Subsidiary 100.00 61 Aldwych, London WC2B
4AE United Kingdom
Ashmore Investment Management Limited Subsidiary 100.00
Ashmore Investment Advisors Limited Subsidiary 100.00
Aldwych Administration Services Limited
(dormant) Subsidiary 100.00
Ashmore Asset Management Limited (dormant) Subsidiary 100.00
Ashmore Avenida Investments (Real Estate)
LLP Subsidiary 56.00
Ashmore Avenida Devco Holding Company Limited(2) Subsidiary 100.00
Ashmore Investment Management (Ireland) Subsidiary 100.00 32 Molesworth Street,
Limited Dublin 2, D02 Y512
------------------------------------------------- --------------- --------- ----------------------------
Ashmore Investment Management India LLP Subsidiary 100.00 507A Kakad Chambers, Dr
Annie Besant Road Worli,
Mumbai 400 018, India
------------------------------------------------- --------------- --------- ----------------------------
Ashmore Investment Management (US) Corporation Subsidiary 100.00 The Corporation Trust
Center, 1209 Orange Street,
Wilmington, DE 19801,
USA
----------------------------
Ashmore Investment Advisors (US) Corporation Subsidiary 100.00
------------------------------------------------- --------------- --------- ----------------------------
Avenida Partners LLC Subsidiary 100.00 200 Park Avenue South
New York, 10003
USA
----------------------------
Avenida CREF I Manager Cayman LLC Subsidiary 100.00
----------------------------
Avenida CREF I Manager LLC Subsidiary 100.00
Avenida A2 Partners LLC Subsidiary 100.00
Avenida Colombia Member LLC Subsidiary 83.30
Avenida CREF II Partners LLC Subsidiary 100.00
Avenida CREF II GP LLC Subsidiary 100.00
MCA Partners LLC Subsidiary 100.00
------------------------------------------------- --------------- --------- ----------------------------
1. Ashmore Investments (UK) Limited (registered number 3345198)
is exempt from the requirements relating to the audit of accounts
under section 479A of the UK Companies Act 2006.
2. Ashmore Avenida Devco Holding Company Limited is under an
active proposal to strike off.
% voting Registered address and
Name Classification interest place of incorporation
------------------------------------------ --------------- --------- ------------------------------
Avenida REF Holding SA Subsidiary 100.00 Yamandu 1321, 11500
Montevideo
Uruguay
------------------------------
Avenida CREF II Manager SRL Subsidiary 99.99
------------------------------
Avenida CREF Partners SRL Subsidiary 99.99
Avenida CREF II GP SRL Subsidiary 85.09
------------------------------------------ --------------- --------- ------------------------------
Ashmore Avenida LatAm Energy Efficient Subsidiary 100.00 10 rue du Château
Affordable Housing Fund III GP d'Eau, L-3364 Leudelange,
Grand Duchy of Luxembourg
------------------------------------------ --------------- --------- ------------------------------
Ashmore Investment Management (Singapore) Subsidiary 100.00 1 George Street, #15-04,
Pte. Ltd. Singapore 049145
------------------------------
KCH Cairo Pte. Ltd (dormant) Subsidiary 100.00
------------------------------------------ --------------- --------- ------------------------------
KCH Cairo S.A.E. (dormant) Subsidiary 99.20 Zone (T) - Emaar, Up Town
Cairo, Mokattam, Cairo,
Egypt
------------------------------------------ --------------- --------- ------------------------------
PT Ashmore Asset Management Indonesia Subsidiary 60.04 Pacific Century Place,
Tbk 18th Floor,
SCBD Lot 10, Jl. Jenderal.
Sudirman Kav.
52-53 Jakarta 12190,
Indonesia
------------------------------
Financial
Ashmore Dana Pasar Uang Syariah asset 100.00
------------------------------
Financial
Ashmore Dana USD Fixed Income asset 39.42
------------------------------------------ --------------- --------- ------------------------------
Ashmore Management Company Colombia Subsidiary 59.26 Carrera 7 No. 75-66,
SAS Office 701 & 702
Bogotá, Colombia
------------------------------
Ashmore-CAF-AM Management Company
SAS Subsidiary 53.09
------------------------------
Ashmore Holdings Colombia SAS Subsidiary 100.00
Ashmore Investment Advisors S.A.
Sociedad Fiduciaria Subsidiary 100.00
Ashmore Backup Management Company
SAS Subsidiary 100.00
Avenida Colombia Management Company
SAS Subsidiary 100.00
Ashmore Avenida DP General Partner
SAS Subsidiary 80.00
Ashmore Avenida Back Office SAS Subsidiary 100.00
------------------------------------------ --------------- --------- ------------------------------
Ashmore Peru Backup Management Subsidiary 100.00 Av. Circunvalación
del Club Golf Los Incas
No. 134, Torre 1, Of.
505, Surco. Lima, Perú
------------------------------------------ --------------- --------- ------------------------------
Ashmore Japan Co. Limited Subsidiary 100.00 11F, Shin Marunouchi Building
1-5-1 Marunouchi Chiyoda-ku
Tokyo Japan 100-6511
------------------------------------------ --------------- --------- ------------------------------
Ashmore Investments (Colombia) Subsidiary 100.00 c/o Hermosilla 11, 4 A,
SL 28001 Madrid, Spain
------------------------------------------ --------------- --------- ------------------------------
Ashmore Management (DIFC) Limited Subsidiary 100.00 Unit L30-07, Level 30,
ICD Brookfield Place,
Dubai International Financial
Centre, Dubai, UAE
------------------------------------------ --------------- --------- ------------------------------
Ashmore Investment Saudi Arabia Subsidiary 100.00 3rd Floor Tower B, Olaya
Towers
Olaya Main Street, Riyadh,
Saudi Arabia
------------------------------
Consolidated
Ashmore Saudi Equity Fund fund 69.29
------------------------------------------ --------------- --------- ------------------------------
Ashmore AISA (Cayman) Limited Subsidiary 100.00 PO Box 309, Ugland House,
Grand Cayman,
KY1-1104, Cayman Islands
------------------------------------------ --------------- --------- ------------------------------
AA Development Capital Investment Subsidiary 55.00 Les Cascades Building
Managers 33 Edith Cavell Street,
(Mauritius) LLC Port Louis
Mauritius
------------------------------
Ashmore Investments (Holdings)
Limited Subsidiary 100.00
------------------------------------------ --------------- --------- ------------------------------
% voting Registered address
Name Classification interest and place of incorporation
------------------------------------------------ --------------- --------- ---------------------------
100.00 Trafalgar Court
Les Banques
St Peter Port
GY1 3QL
Ashmore Management Company Limited Subsidiary Guernsey
---------------------------
Ashmore Global Special Situations Fund 3
(GP) Limited Subsidiary 100.00
---------------------------
Ashmore Global Special Situations Fund 4
(GP) Limited Subsidiary 100.00
Ashmore Global Special Situations Fund 5
(GP) Limited Subsidiary 100.00
Financial
Ashmore Venezuela Recovery Fund 2 Ltd asset 45.85
Ashmore Emerging Markets Debt and Currency Consolidated
Fund Limited fund 57.72
------------------------------------------------ --------------- --------- ---------------------------
Ashmore SICAV Emerging Markets Middle East Consolidated 88.78 10, rue du Chateau
Equity Fund fund d'Eau
L-3364 Leudelange
Grand-Duchy of Luxembourg
---------------------------
Ashmore SICAV Emerging Markets Sovereign Consolidated
Debt ESG Fund fund 100.00
---------------------------
Ashmore SICAV Emerging Markets Corporate Consolidated
Debt ESG Fund fund 100.00
Ashmore SICAV Emerging Markets China Bond Consolidated
Fund fund 100.00
Ashmore SICAV Emerging Markets Global Small-Cap Consolidated
Equity Fund fund 47.55
Ashmore SICAV Emerging Markets IG Total Consolidated
Return Fund fund 100.00
Ashmore SICAV Emerging Markets Total Return Consolidated
ESG Fund fund 99.77
Ashmore SICAV Emerging Markets Indonesian Consolidated
Equity Fund fund 100.00
Ashmore SICAV Emerging Markets Equity ESG Consolidated
Fund fund 99.36
Ashmore SICAV Emerging Markets Local Currency Consolidated
Bond Fund 2 fund 100.00
Ashmore SICAV Emerging Markets Shariah Active Financial
Equity Fund asset 100.00
Ashmore SICAV Emerging Markets IG Short Financial
Duration Fund asset 30.01
Ashmore SICAV Emerging Markets Multi-Asset Financial
Fund asset 28.46
------------------------------------------------ --------------- --------- ---------------------------
Ashmore Emerging Markets Corporate Debt Consolidated 100.00 50 South LaSalle Street
ESG Fund fund Chicago, Illinois
60603
---------------------------
Ashmore Emerging Markets Investment Grade Consolidated
Income Fund fund 100.00
---------------------------
Consolidated
Ashmore Emerging Markets Active Equity Fund fund 73.14
Ashmore Emerging Markets Local Currency Consolidated
Bond Fund fund 78.91
Consolidated
Ashmore Emerging Markets Equity ESG Fund fund 100.00
Ashmore Emerging Markets Short Duration Consolidated
Select Fund fund 100.00
------------------------------------------------ --------------- --------- ---------------------------
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
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 statements contained within this document,
regardless of whether those statements are affected as a result of
new
information, future events or otherwise.
Statutory accounts
The financial information set out above does not constitute the
Group's statutory accounts for the years ending 30 June 2023 or 30
June 2022. Statutory accounts for 2022 have been delivered to the
registrar of companies, and those for 2023 will be delivered in due
course. The auditors have reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006 in
respect of the accounts for 2022 or 2023.
Alternative Performance Measures
Ashmore discloses APMs in order to assist shareholders'
understanding of the Group's operational performance during the
accounting period and to allow consistent comparisons with prior
periods.
The calculation of APMs is consistent with the financial year
ended 30 June 2022. Historical disclosures relating to APMs,
including explanations and reconciliations, can be found in the
respective interim financial reports and Annual Reports and
Accounts.
Net revenue
As shown in the CSCI, net revenue is total revenue less
distribution costs and including FX. This provides a comprehensive
view of the revenues recognised by the Group in the period.
FY2023 FY2022
Reference GBPm GBPm
------------------- ---------- ------ ------
Total revenue CSCI 193.2 254.4
Less:
Distribution costs CSCI (2.2) (3.5)
Add:
Foreign exchange CSCI 5.4 11.6
------------------- ---------- ------ ------
Net revenue 196.4 262.5
------------------------------- ------ ------
Net management fees
The principal component of the Group's revenues is management
fees, net of associated distribution costs, earned on AuM.
FY2023 FY2022
Reference GBPm GBPm
-------------------- ---------- ------ ------
Management fees CSCI 185.4 247.0
Less:
Distribution costs CSCI (2.2) (3.5)
-------------------- ---------- ------ ------
Net management fees 183.2 243.5
-------------------------------- ------ ------
Net management fee margin
The net management fee margin is defined as the ratio of
annualised management fees less distribution costs to average AuM
for the period, in US dollars since it is the primary currency in
which fees are received and matches the Group's AuM disclosures.
The average AuM excludes assets where fees are not recognised in
revenues, for example AuM related to associates or joint ventures.
The margin is a principal measure of the firm's revenue generating
capability and is a commonly used industry performance measure.
FY2023 FY2022
--------------------------------- ------ ------
Net management fee income (US$m) 220.6 323.4
Average AuM (US$bn) 57.7 82.8
---------------------------------- ------ ------
Net management fee margin (bps) 38 39
---------------------------------- ------ ------
Variable compensation ratio
The variable compensation ratio is defined as the charge for VC
as a proportion of 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 VC
is a component of personnel expenses and comprises share-based
payments and performance-related cash bonuses.
EBVCIT is operating profit excluding the charge for VC,
charitable donations 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.
FY2023 FY2022
Reference GBPm GBPm
--------------------------- --------------- ------ ------
Operating profit CSCI 77.4 119.2
Less:
Seed capital-related items CSCI, Note 20c 26.3 46.2
Add:
Variable remuneration Note 9 34.8 45.6
Charitable donations 0.5 0.6
-------------------------------------------- ------ ------
EBVCIT 139.0 211.6
-------------------------------------------- ------ ------
VC ratio 25.0% 21.5%
-------------------------------------------- ------ ------
EBITDA
EBITDA provides a view of the operating performance of the
business before certain non-cash items, financing income and
charges, and taxation.
FY2023 FY2022
Reference GBPm GBPm
-------------------------------- ---------- ------ ------
Operating profit CSCI 77.4 119.2
Add:
Depreciation and amortisation Note 11 3.2 3.1
-------------------------------- ---------- ------ ------
EBITDA 80.6 122.3
-------------------------------------------- ------ ------
Adjusted net revenue, adjusted operating costs and adjusted
EBITDA
Adjusted figures exclude items relating to FX translation and
seed capital. This provides an alternative view of performance,
excluding the volatility associated with those items, which is used
by management to assess the Group's operating performance.
FY2023 FY2022
Reference GBPm GBPm
------------------------------------- --------------- ------ ------
Net revenue CSCI 196.4 262.5
Less:
FX translation Note 7 (1.0) (5.3)
------------------------------------- --------------- ------ ------
Adjusted net revenue 195.4 257.2
------------------------------------------------------ ------ ------
FY2023 FY2022
Reference GBPm GBPm
------------------------------------- --------------- ------ ------
Personnel expenses CSCI (66.2) (73.4)
Other expenses CSCI (27.8) (25.1)
Less:
Other expenses in consolidated funds Note 20c 1.3 1.4
Add:
VC % on FX translation Note 7 0.3 1.1
------------------------------------- --------------- ------ ------
Adjusted operating costs (92.4) (96.0)
------------------------------------------------------ ------ ------
FY2023 FY2022
Reference GBPm GBPm
------------------------------------- --------------- ------ ------
EBITDA 80.6 122.3
Less:
FX translation Note 7 (1.0) (5.3)
VC % on FX translation Note 7 0.3 1.1
Seed capital-related items CSCI, Note 20c 26.3 46.2
------------------------------------- --------------- ------ ------
Adjusted EBITDA 106.2 164.3
------------------------------------------------------ ------ ------
Adjusted EBITDA margin
The ratio of adjusted EBITDA to adjusted net revenue. This is an
appropriate measure of the Group's operational efficiency and its
ability to generate returns for shareholders.
Adjusted diluted EPS
Diluted EPS excluding items relating to FX translation and seed
capital, as described above, and the related tax impact.
Reference FY2023 FY2022
pence pence
---------------------------------- ----------------------- ------ ------
Diluted EPS CSCI 12.2 12.6
Less:
FX translation Note 7 (0.1) (0.6)
Tax on FX translation - 0.1
Seed capital-related items CSCI, Note 8, Note 20c 1.2 7.1
Tax on seed capital-related items (0.6) (0.5)
----------------------------------------------------------- ------ ------
Adjusted diluted EPS 12.7 18.7
----------------------------------------------------------- ------ ------
Conversion of operating profits to cash
This compares cash generated from operations, excluding
consolidated funds, to adjusted EBITDA, and is a measure of the
effectiveness of the Group's operations in converting profits to
cash flows for shareholders. Excluding consolidated funds also
ensures consistency between the cash flow and adjusted EBITDA.
FY2023 FY2022
Reference GBPm GBPm
------------------------------------ --------------------------------- ------ ------
Cash generated from operations Consolidated cash flow statement 111.6 182.1
Less:
Cash flows relating to consolidated
funds Note 20c 0.1 2.8
------------------------------------ --------------------------------- ------ ------
Operating cash flow 111.7 184.9
----------------------------------------------------------------------- ------ ------
Adjusted EBITDA 106.2 164.3
----------------------------------------------------------------------- ------ ------
Conversion of operating profits
to cash 105% 113%
----------------------------------------------------------------------- ------ ------
Capital resources
Ashmore has calculated its capital resources in a manner
consistent with the IFPR. Note that goodwill and intangible assets
include associated deferred tax liabilities and deferred
acquisition costs, and foreseeable dividends relate to the proposed
final dividend of 12.1 pence per share. Other adjustments relate to
the cash flow hedging reserve.
30 June 30 June
2023 2022
Reference GBPm GBPm
-------------------------------- ---------------------------------- ------- -------
Total equity Balance sheet 898.8 945.0
Less:
Goodwill and intangibles n/a (80.0) (84.4)
Deferred tax assets Balance sheet (23.9) (32.7)
Foreseeable dividends Note 14 (85.1) (84.7)
Investments in financial sector
entities n/a (5.0) (4.9)
Consolidated statement of changes
Other adjustments in equity - 4.9
-------------------------------- ---------------------------------- ------- -------
Capital resources 704.8 743.2
-------------------------------------------------------------------- ------- -------
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