Ashmore Regulatory News (ASHM)

27 Feb 2007 07:03

Ashmore Group PLC27 February 2007 27th February 2007 Ashmore Group plc UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED31 DECEMBER 2006 Ashmore Group plc today announces its first set of interim results since listingon the LSE in October 2006. Financial highlights • Assets under management (AuM) of US$26.8bn at 31 December 2006, up US$6.7bn, 33% from June 2006 • Net management fees of £55.8m, 62% higher than six months to 31 December 2005 • Performance fees of £8.2m (£38.1m in the six-month period to 31 December 2005) • Pre-tax profit of £60.2m (up 2%, a 13% increase in underlying terms - note 1) • Basic eps of 6.31p (2005: 6.42p) and diluted eps of 5.96p (2005: 6.33p) • A maiden interim dividend of 2.30p per share will be paid on 27 April 2007 Note 1 -Underlying excludes impact of foreign exchange movements and the resultsof and the gain from disposal of the Group's administration company in December2005 from the comparative period. Commenting on the results Mark Coombs, Chief Executive Officer Ashmore Groupplc, said: "The Group continues to focus on and deliver strong performance across itsinvestment themes, increasing its assets under management and growing netmanagement fees. These results demonstrate the excellent start Ashmore has madeto life as a public company. The board is confident of the Group's prospects forthe remainder of the financial year." Analyst briefing There will be a briefing for analysts and shareholders at 9.30 am GMT today atthe offices of UBS at 1 Finsbury Avenue, London EC2M 2PP. A conference facilitycan be accessed via +44 (0)20 7162 0025, stating 'Ashmore' and 'Jim Pettigrew'as host. The replay facility will be available until midnight on 2nd March2007. The Replay dial in is +44 (0)20 7031 4064 and the access code is 740092. Contacts Ashmore Group plc Jim Pettigrew +44 20 7557 4157Penrose Financial Gay Collins +44 20 7786 4888 / mobile 07798 626282Ashmore@penrose.co.uk Ashmore Group plc Chief Executive Officer's statement The results for the six months to 31 December 2006 demonstrate another period ofstrong growth and progress towards delivering the strategic objectives set outat the time of the IPO in October 2006. Overview of financial results Assets under management (AuM) at 31 December 2006 were US$26.8bn, an increase ofUS$6.7bn (33%) compared to June 2006. Net subscriptions were achieved across allthe Group's investment themes during the period and these totaled US$4.2bn;comprising net subscriptions into existing funds of US$1.7bn, and fund raisingsinto new products and funds of US$2.5bn. There was net performance in the periodof US$2.5bn. Inflows generated through investments into the Group's MultiStrategy Fund, which invests across the Group's investment themes, represented18% of the US$4.2bn total net inflows in the period. Net management fees in the period increased substantially and were 62% higherthan the comparative period in the prior financial year reflecting the stronggrowth in AuM. The Group's net management fee margin for the six-month period to31 December 2006 on an annualised basis was 90 basis points (bp) compared to88bp for the six months to 31 December 2005 and 83bp for the twelve-month periodto 30 June 2006. The Group continues to deliver strong investment performance. As anticipated atthe time of the Group's IPO, crystallised performance fees during the financialyear to 30 June 2007 are expected to be substantially lower than thosecrystallised in the prior year. Crystallised performance fees in the six monthsto 31 December 2006 were £8.2m (six months to 31 December 2005: £38.1m). This ismainly due to the investment performance in EMLIP, a US$4.6bn AuM global USdollar debt fund, where investment performance in the performance year endedAugust 2006 was in line with the hurdle rate, rather than exceeding it as it haddone in the prior year. Costs continue to be tightly controlled. Against the backdrop of substantialrevenue growth, appropriate investment has been made, and will continue to bemade, in infrastructure and various support functions. The Group's variablecompensation as a percentage of earnings before tax, interest and variablecompensation was 16.4% for the six months to December 2006 (six months toDecember 2005: 22.5%). At the time of the IPO, the Group indicated that in thecurrent financial year this ratio could potentially be at the bottom of or evenslightly below its medium term target range of 20% to 25%. This guidance targetrange remains in place for future years. Overview of financial results The Group's operating profit margin for the six months to 31 December 2006 was78% (six months to December 2005: 73%) as it benefited from the lower variablecompensation ratio. The Group continues to plan the development of itsactivities as a relatively high margin asset management business. The Group reported profit before taxation of £60.2m in the six-month period to31 December 2006, compared with £59.0m for the corresponding period inthe previous financial year. This represents a headline increase of £1.2m (2%). In underlying terms, pre-tax profit rose by 13%. The underlying figures arecalculated by excluding the impact of foreign exchange movements (predominatelythe weaker US dollar relative to sterling) net of hedging (£2.1m), and strippingout from the prior year figures the results from the Group's administrationcompany (pre-tax profit £0.8m) and the gain on disposal from the sale of thatcompany in December 2005 (£2.8m). Basic eps was 6.31p in the six-month period to 31 December 2006, compared to6.42p in the comparative prior year period. Eps in the prior period benefitedfrom a lower tax charge arising as a consequence of the one-off gain on disposalof the administration company not attracting tax. Excluding the impact of this,basic eps was slightly ahead of the prior period. Operations and investment theme review The Group's investment philosophy and process has been in place for many years and remains unchanged following the Group's IPO in October 2006. As at 31 December 2006, the Group managed 40 funds, diversified across fourinvestment themes. US$bn US$bn US$bn US$bnInvestment theme AuM as at AuM as at Net subs Performance 30/6/06 31/12/06 Global US$ 15.2 1.3 1.8 18.3Local currency 3.0 0.4 0.4 3.8Special Sits 1.3 1.5 0.1 2.9Equity 0.6 1.0 0.2 1.8Total 20.1 4.2 2.5 26.8 Global US$ The Global US$ investment theme comprises US$ and other hard currencydenominated instruments, investing principally in sovereign bonds but with agrowing corporate debt element. Operations and investment theme review AuM at 31 December 2006 were US$18.3bn, an increase of US$3.1bn (20%) from 30June 2006. Net subscriptions in the six-month period were US$1.3bn, withperformance contributing US$1.8bn to the growth in AuM. During the period there were strong net inflows into the theme's publicopen-ended funds. In addition, a new structured product initially funded atUS$0.2bn. Local currency The local currency investment theme comprises local currency and local currencydenominated debt instruments. AuM at 31 December 2006 were US$3.8bn, an increase of US$0.8bn (27%) from30 June 2006. Net subscriptions were US$0.4bn, with performance contributingUS$0.4bn. Net subscriptions and performance contributed equally to AuM growth in theperiod. As part of the process of accessing the increasing European appetite forthe local currency theme, a new targeted SICAV fund was launched during theperiod and this initially funded at US$0.1bn.The public open-ended funds in thetheme continued to attract new monies. Special Situations (distressed debt/private equity) The special situations (distressed debt / private equity) theme comprisesinvestments in debt and /or equity or other instruments focussing on situationsusually involving specialist corporate investments and /or projects andincluding distressed assets or distressed sellers of assets, often incorporatingrestructuring, reorganisations and/or a private equity approach. AuM at 31 December 2006 were US$2.9bn, an increase of US$1.6bn (123%). Netsubscriptions were US$1.5bn, with performance contributing US$0.1bn. The Group's GSSF3 fund, which was launched in August 2006, represented US$1.4bnof the total net subscriptions in the period. Equity The equity investment theme comprises emerging market equity and equity relatedsecurities. The instruments invested by the funds can include equity,convertibles, warrants and equity derivatives. Assets under management at 31 December 2006 were US$1.8bn, an increase ofUS$1.2bn (200%) from 30 June 2006. Net subscriptions were US$1.0bn, withperformance contributing US$0.2bn. Net subscriptions in the period were bolstered by US$0.8bn inflows from newsegregated accounts. Cash flow and balance sheet The Group's cash flow statement demonstrates the strong cash flowcharacteristics of the business. The Group generated a £25.2m increase in its cash and cash equivalents in thesix-month period to 31 December 2006. The Group continues to maintain a strong balance sheet to meet regulatorycapital, commercial and development requirements. Dividend A 'maiden' interim dividend of 2.30p for the six-month period to 31 December2006 will be paid on 27 April 2007 to shareholders on the register on 30 March2007. Strategy The Group's strategy, which was articulated at the time of the Group's IPO, isto be the leading emerging markets asset manager across an increasingly broadrange of investment themes by maintaining a market-leading investment trackrecord, delivering growth and enhancing diversification of earnings,facilitating controlled growth and developing further the Ashmore brand andbusiness model. Trading outlook Trading conditions in the six months to 31 December 2006 remained satisfactorywith global liquidity and strong fundamentals in emerging markets continuing tobe positive for the Group's investment themes. The Group continued to attractnet subscriptions across all its investment themes and its track record ofdelivering investment out-performance has been sustained. The Group continues to believe that strong macro-economic, demographic,political factors, enhanced liquidity, index re-weighting and improving globalcredit worthiness should continue to underpin growth across emerging marketasset classes. We believe that Ashmore's experience and expertise in emerging markets assetmanagement, coupled with its demonstrable investment track record, position theGroup well to benefit from the further demand for emerging market products. Theboard is confident of the Group's prospects for the remainder of the financialyear. About Ashmore Group plc Ashmore is one of the world's leading emerging market investment managers with ahistory of consistently outperforming the market. Ashmore specialises in anumber of emerging market investment themes: dollar denominated debt, localcurrency and local currency debt, special situations, incorporating distresseddebt and private equity, and public equity. More information is available on the Group's website www.AshmoreGroup.com Consolidated Income Statement Unaudited Unaudited Audited Note Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £m £m £m Management fees 57.8 35.4 80.8Performance fees 8.2 38.1 54.2Other revenue 7.9 0.2 2.9Total revenue 73.9 73.7 137.9Less: Distribution costs (2.0) (1.0) (2.3)Net revenue 71.9 72.7 135.6 Personnel expenses (13.1) (17.3) (34.4)Other expenses (2.6) (2.1) (6.5)Operating profit 56.2 53.3 94.7 Gain on sale of business - 2.8 2.8Interest income 4.0 2.9 6.5Interest expense - - (0.1)Profit before tax 60.2 59.0 103.9 Income tax expense (18.2) (16.4) (32.3)Profit for the period 42.0 42.6 71.6 Attributable to: Equity holders of the parent 42.0 42.5 71.5Minority interest - 0.1 0.1Profit for the period 42.0 42.6 71.6 Earnings per share: Basic 6.31p 6.42p 10.82pDiluted 5.96p 6.33p 10.39p Consolidated Balance Sheet Unaudited Unaudited Audited As at As at As at 31 December 31 December 30 June 2006 2005 2006 Note £m £m £m AssetsProperty, plant and equipment 0.2 0.2 0.2Intangible assets 4.1 4.1 4.1Other receivables 0.1 5.2 3.6Deferred tax asset 11.5 0.4 1.6 Total non-current assets 15.9 9.9 9.5 Trade and other receivables 38.2 24.6 20.0Derivative financial instruments 0.5 - 1.3Cash and cash equivalents 157.9 107.0 132.7 Total current assets 196.6 131.6 154.0Total assets 212.5 141.5 163.5 EquityIssued capital 5 - - -Share premium 0.3 0.3 0.3Retained earnings 154.3 91.6 96.3 Total equity 154.6 91.9 96.6 LiabilitiesDeferred tax liabilities - 3.3 0.1Total non-current liabilities - 3.3 0.1 Current tax 15.3 12.6 18.0Derivative financial instruments - 0.6 0.1Trade and other payables 42.6 33.1 48.7 Total current liabilities 57.9 46.3 66.8Total liabilities 57.9 49.6 66.9Total equity and liabilities 212.5 141.5 163.5 Consolidated Statement of Changes in Equity Total equity attributable to Issued Share Retained equity holders of Minority Total capital premium earnings the parent interest equity £m £m £m £m £m £m Balance at 1 July 2005 - 0.3 69.1 69.4 0.5 69.9 Profit for the period - - 42.5 42.5 0.1 42.6Disposal of business - - - - (0.6) (0.6)Dividends - - (20.0) (20.0) - (20.0) Balance at 31 December 2005 - 0.3 91.6 91.9 - 91.9 Profit for the period - - 29.0 29.0 - 29.0Share based payments - - 10.7 10.7 - 10.7Dividends - - (35.0) (35.0) - (35.0) Balance at 30 June 2006 - 0.3 96.3 96.6 - 96.6 Profit for the period - - 42.0 42.0 - 42.0Share based payments - - 1.2 1.2 - 1.2Deferred tax - - 9.5 9.5 - 9.5Current tax - - 4.2 4.2 - 4.2Sale of own shares - - 1.1 1.1 - 1.1 Balance at 31 December 2006 - 0.3 154.3 154.6 - 154.6 Consolidated Cash Flow Statement Unaudited Unaudited Audited Note Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £m £m £mOperating activities Cash receipts from customers 62.1 60.2 151.7Cash paid to suppliers and employees (26.4) (13.5) (34.7) Cash generated from operations 35.7 46.7 117.0 Income taxes paid (17.5) (7.8) (22.7) Net cash from operating activities 18.2 38.9 94.3 Investing activitiesInterest received 3.9 2.5 6.1Dividends received from subsidiary - - 1.4Net proceeds from disposal of subsidiary - (0.2) (0.2) Net cash from investing activities 3.9 2.3 7.3 Financing activities Dividends paid - (20.0) (55.0)Sale of own shares 1.0 - - Net cash from/(used in) financing activities 1.0 (20.0) (55.0) Effect of exchange rate changes on cash and cash equivalents 2.1 (0.8) (0.5) Net increase in cash and cash equivalents 25.2 20.4 46.1 Cash and cash equivalents at beginning of period 132.7 86.6 86.6 Cash and cash equivalents at end of period 157.9 107.0 132.7 Cash and cash equivalents comprise:Cash at bank and in hand as shown in balance sheet 157.9 107.0 132.7 157.9 107.0 132.7 Notes to the interim report 1) Basis of preparation and significant accounting policies The interim report is unaudited and does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The financialstatements have been prepared in accordance with IAS 34 'Interim FinancialReporting' and the Listing Rules of the Financial Services Authority (FSA). The accounting policies applied in these interim financial statements areconsistent with those applied in the Group's prospectus, prior to the officiallisting on the London Stock Exchange on 12 October 2006, for the year ended 30 June 2006. The prospectus is available on the group's website. 2) Earnings per share Basic earnings per share is calculated by dividing the profit for the financialyear attributable to equity holders of the parent by the weighted average numberof ordinary shares in issue during the year. Diluted earnings per share is calculated as for basic earnings per share with afurther adjustment to the weighted average number of ordinary shares to reflectthe effects of all dilutive potential ordinary shares. There is no difference between the profit for the financial year attributable toequity holders of the parent used in the basic and diluted earnings per sharecalculations. Reconciliation of the figures used in calculating basic and diluted earnings pershare: Six months ended Six months ended Year ended 31 December 2006 31 December 2005 30 June 2006 Weighted average number of ordinary shares used in calculation of basic earnings per share 664,780,163 660,200,000 660,200,000Effect of dilutive potential ordinary shares - share options 38,281,264 9,562,343 26,859,915Weighted average number of ordinary shares used in calculation of diluted earnings per share 703,061,427 669,762,343 687,059,915 3) Share-based payments The fair value of share-based payments expensed to the Consolidated IncomeStatement during the six months to 31 December 2006 was £0.5m (six months 2005:£3.5m). 4) Dividends An analysis of dividends paid is as follows: Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 £m £m £m Interim dividend - 20.0 55.0 Dividend per share - 3.03p 8.33p Dividends are recognised in the accounts in the year in which they are paid, orin the case of a final dividend when approved by the shareholders. Dividend per share figures are restated to reflect current share structure asdescribed above. The board has approved an interim dividend for the six months ended 31 December2006 of 2.30p per share. 5) Share capital Share capital authorised Six months Six months Year Six months Six months Year ended ended ended ended ended ended 31 December 31 December 30 June 31 December 31 December 30 June 2006 2005 2006 2006 2005 2006 No. of No. of No. of £'000 £'000 £'000 shares shares shares Ordinary shares of 0.01p each (2005: 1p each) 900,000,000 360,000 900,000,000 90 4 90 Share capital allottedAllotted, called up and fully paid equity shares: Six months Six months Year Six months Six months Year ended ended ended ended ended ended 31 December 31 December 30 June 31 December 31 December 30 June 2006 2005 2006 2006 2005 2006 No. of No. of No. of £'000 £'000 £'000 shares shares shares Ordinary shares of 0.01p each (2005: 1p each) 708,925,000 279,720 708,925,000 70 3 70 All the above ordinary shares represent equity of the company and rank paripassu in respect of participation and voting rights. During the year thefollowing events occurred: On 23 June 2006 the company issued bonus shares in the amount of 24 ordinaryshares for every one ordinary share held. Also on 23 June 2006 the company allotted 96,250 ordinary shares of £0.01p each to the Ashmore 2004 Employee Benefit Trust. On 26 June 2006 the company undertook a share split where all ordinary shares of1p were divided into 100 new ordinary shares of 0.01p each. At 30 June 2006 there were 46,225,000 options in issue with contingent rights tothe allotment of ordinary shares of 0.01p in the company. The exercise periodfor these options ranges from December 2005 to April 2016 and the allotmentprice ranges from 0.52p to 24.24p. At 31 December 2006 there were 38,246,671 options in issue with contingentrights to the allotment of ordinary shares of 0.01p in the company. The exerciseperiod for these options ranges from December 2005 to December 2016 and theallotment price ranges from 0.52p to 170p. There are also restricted shareawards issued under the Omnibus scheme totalling 2,009,522 shares that have arelease date in November 2011. 6) Own shares The Ashmore 2004 Employee Benefit Trust (EBT) was established to encourage andfacilitate the acquisition and holding of shares in the company by the employeesof the company with a view to facilitating the recruitment and motivation of theemployees of the company. As at the period end, the EBT owned 38,725,000ordinary shares of 0.01p with a nominal value of £3,872.50 and shareholders'funds are reduced by £5,941,500 in this respect. It is the intention to makethese shares available to employees by way of sale through the share optionscheme. 7) Exchange rates The only foreign exchange rate which has a material impact on the reporting ofthe Group's results is the US dollar. Average rate Average rate Average rate Closing rate Closing rate Closing rate six months six months year as at as at as at ended ended ended 31 December 31 December 30 June 31 December 31 December 30 June 2006 2005 2006 2006 2005 2006 US dollar 1.9589 1.7229 1.8484 1.9129 1.7581 1.7806 Independent Review Report to Ashmore Group plc Introduction We have been engaged by the company to review the financial information for thesix months ended 31 December 2006 which comprises the consolidated incomestatement, consolidated balance sheet, consolidated statement of changes inequity and consolidated cash flow statement and the related notes. We have readthe other information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2006. KPMG Audit PlcChartered Accountants27 February 2007 This information is provided by RNS The company news service from the London Stock Exchange