Annual Report and Accounts 2016 Ashmore Group plc Annual R eport and A ccounts 2016

128 Pages·2016·8.82 MB·English

Annual Report and Accounts 2016
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Contents 2016 Financial overview
STRATEGIC REPORT  Assets under management
(AuM)
Investment themes ............................................2
2012 63.7
52.6
Consistent proposition .......................................4 US$ bn 2013 77.4
Ashmore’s strategy ............................................6 2014 75.0
2015 58.9
Business model ..................................................8 2015: US$58.9bn
2016 52.6
Key performance indicators .............................10
Chairman’s statement ......................................12 Net revenue
Chief Executive’s review ..................................13 232.5 2012 333.3
£ m
Consistent perspective ....................................16 2013 355.5
2014 262.9
Market review ..................................................18 2015: £283.3m
2015 283.3
Consistent processes ......................................22 2016 232.5
Business review ...............................................24
Adjusted EBITDA margin
Consistent procedures.....................................30
Risk management ............................................32 62% 2012 71
2013 70
Corporate social responsibility .........................38
2014 67
2015: 67%
2015 67
2016 62
GOVERNANCE
Board of Directors ............................................45
Profit before tax
Corporate governance .....................................46
167.5 2012 243.2
£ m
Audit and Risk Committee report ...................49
2013 257.6
Nominations Committee report ......................53 2014 171.6
2015: £181.3m
2015 181.3
Remuneration report ........................................54
2016 167.5
Statement of Directors’ responsibilities ..........68
Directors’ report ...............................................69 EPS Basic
19.1 2012 26.8
p
FINANCIAL STATEMENTS 2013 30.0
2014 19.5
Independent Auditor’s report ...........................74 2015: 20.3p
2015 20.3
Consolidated financial statements ..................78 2016 19.1
Company financial statements ........................82
Dividends per share
Notes to the financial statements ...................85
Five-year summary .........................................122 16.65p 2012 15.00
2013 16.10
Information for shareholders .........................123
2014 16.45
2015: 16.65p
2015 16.65
2016 16.65
For the online version of the annual report, More information
other announcements and details of Non-GAAP alternative performance measures are defined on
pages 10-11 and a reconciliation to GAAP measures is provided
up-coming events, please visit the Investor
on page 24, including the 2015 comparative for adjusted EBITDA
Relations section of the Ashmore Group plc
margin. Five-year comparatives for other alternative performance
website at www.ashmoregroup.com measures are included in the five-year summary on page 122.
Net revenue includes foreign exchange.
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Ashmore is a specialist Emerging Markets
asset manager, with a strategy and business
model designed to withstand the fluctuations
of market cycles.
Through these cycles, Ashmore has
consistently followed proven investment
processes to deliver outperformance for
clients and high profitability and strong
cash generation for shareholders.
Learn more about Ashmore’s consistent approach throughout this report
Understand Ashmore’s Understand the Understand Ashmore’s Understand
business model Emerging Markets performance Ashmore’s approach
opportunities to risk
Page 4 Page 16 Page 22 Page 30
Ashmore Group plc | Annual Report and Accounts 2016 1
Investment themes
Focused on Emerging Markets
Ashmore offers a broad and continually evolving range
of Emerging Markets investment themes
Theme EXTERNAL DEBT LOCAL CURRENCY CORPORATE DEBT
Theme premise Invests in debt instruments Invests in local currencies and Invests in debt instruments
issued by sovereigns local currency-denominated issued by public and private
(governments) and instruments issued by sector companies.
quasi-sovereigns sovereign, quasi-sovereign
(government-sponsored). and corporate issuers.
Global – Broad – Bonds – Broad
Emerging
– Sovereign – Bonds (Broad) – High yield
Markets
sub-themes – Sovereign, investment grade – FX – Investment grade
– Short duration – FX+ – Local currency
– Investment grade – Private debt
– Short duration
Theme BLENDED DEBT
Theme premise Mandates specifically combine – Blended debt
external, local currency and – Investment grade
corporate debt measured against
– Absolute return
tailor-made blended indices.
Regional/ China, Indonesia, Turkey Asia, Latin America
country focused
sub-themes
Theme MULTI-ASSET
Theme premise Specialised, efficient, all-in-one – Global
access to strategic asset
allocation across the
full Emerging Markets
investment universe.
2 Ashmore Group plc | Annual Report and Accounts 2016
Ashmore has focused on Emerging Markets investing for more than two decades. Over that
S
period it has established a diversified range of eight investment themes, shown below, with tra
dedicated strategies under each theme providing either global Emerging Markets exposure teg
ic
or specific regional or country exposure. The Group’s products are available in a wide range re
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of fund structures, covering the full liquidity spectrum from daily-dealing pooled funds through o
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to multi-year locked-up partnerships. Ashmore continually seeks to innovate by providing
access to new investment strategies as the Emerging Markets develop.
EQUITIES ALTERNATIVES OVERLAY/LIQUIDITY Theme
Invests in equity and equity- Provides access to private Separates and centralises the Theme premise
related instruments within the equity, healthcare, infrastructure, currency risk of an underlying
Emerging Markets including special situations, distressed Emerging Markets asset class
global, regional, country, small debt and real estate in order to manage it effectively
cap and frontier opportunities. investment opportunities. and efficiently.
– Global EM value – Private Equity – Overlay Global
Emerging
– Global Small Cap – Healthcare – Hedging
Markets
– Global Frontier – Infrastructure – Cash management sub-themes
– Global Equity Opportunities – Special situations
– Distressed debt
– Real estate
Africa, China, India, Indonesia, Latin Andean, Asia, India Regional/
America, Middle East, Turkey country focused
sub-themes
Theme
Theme premise
Ashmore Group plc | Annual Report and Accounts 2016 3
Consistent
proposition
for long-term value
Brazilian coffee bean harvesting
Brazil first planted coffee in the early 17th century and is the world’s largest producer of coffee,
with 43 million bags produced in 2015 representing 30% of the total market. In addition to the
important export market, domestic consumption has been growing steadily.
Source: ABIC
Consistency, through the cycle
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Ashmore’s business model is designed to g
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withstand the fluctuations of market cycles. re
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Diversification – of clients, investment themes rt
and revenue sources – together with an
inherently high level of cost flexibility, protect
the Group’s profitability and cash generation
in more challenging parts of the cycle.
High profit margin delivered through market cycles
30 90
25 80
20 70
15 60
10
50
5
40
0
30
-5
-10 20
-15 10
-20 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Local currency index (GBI-EM GD) annual return (%, lhs) EBITDA margin (%, rhs)
Source: Ashmore
The Group’s AuM and revenues vary through cycles. Fixed
operating costs are kept at a low level to maximise profitability,
and variable compensation represents a substantial proportion
of total operating costs.
The Remuneration Committee is able to flex the proportion of
Group profits that are distributed to employees through annual
variable compensation awards. A significant proportion of the
annual award is made in equity with a long-dated vesting point
(five years), which serves as an employee retention mechanism
even in more difficult parts of the cycle.
More information
The Remuneration report can be found
on pages 54 to 67.
Ashmore’s strategy
A strategy to capture value for clients
and shareholders from long-term
Emerging Markets growth trends
Three phase strategy
ESTABLISH EMERGING
MARKETS ASSET CLASS
DIVERSIFY DEVELOPED WORLD
CAPITAL SOURCES AND THEMES
MOBILISE EMERGING
MARKETS CAPITAL
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Objectives Progress and priorities
– Establish Ashmore Emerging Markets Progress Priorities
investment processes – Annual Investor Forum – Emphasise Emerging
– Enhance understanding of Emerging Markets and Cass Business Markets structural
in the developed world School seminar trends and investment
– Provide access to Emerging Markets and their – Consistent opportunities as
rapid development opportunities fundamental view of global economic
asset class expressed imbalances unwind
– Increase developed world investor allocations
through research
– Establish differentiated investment themes to Progress Priorities
diversify Emerging Markets product offerings – Product development: – Grow equities business
– Develop new product structures and capabilities Global Equity – Increase US penetration
Opportunities and
– Establish Ashmore as a trusted allocator – Increase intermediary
Absolute return funds
– Broaden and deepen developed world investor base AuM
– Significant capital raising
– Deliver strong performance consistently – Grow scale in new funds
in alternatives theme:
– Develop new conduits
healthcare and
to capital
infrastructure
– Continue to grow
– Provided seed capital to
alternatives AuM
support distribution and
product initiatives
– Capital sourced initially from largest pools, Progress Priorities
i.e. central banks, governments, reserve – Global distribution – Increase scale of
managers and sovereign wealth funds sourcing capital for local platforms
– Manage domestic capital locally local platforms – Realise potential of
– Develop network of local asset – Indonesia growing recently established
management businesses as planned platforms such as
– Create strong local performance track records – Opened office in Dubai Saudi Arabia
– Active management
of seed capital to
support local platforms
Ashmore Group plc | Annual Report and Accounts 2016 7
Business model
High-quality returns from a scalable platform
Ashmore’s business model is designed to withstand the fluctuations
of market cycles, to create value for clients and shareholders
Ashmore Ashmore Outputs
inputs characteristics
More than 20 years’ Specialist Emerging Long-term
experience of Markets focus investment
Emerging Markets performance
Value-orientated for clients
Diverse global active fund
client base management Alignment of
interests through
Network of Committee-based employee equity
Emerging Markets investment ownership
relationships processes
Value for
Broad range of Distinctive shareholders
Emerging Markets remuneration
investment themes philosophy
Global and local Cost efficiency
asset management
platforms Scalable
operating platform
Skilled and
committed Risk-aware culture
employees
8 Ashmore Group plc | Annual Report and Accounts 2016