REG-Ashmore Group Plc Interim Results - Amendment

Released : 27/02/2007

                                                                                                                       .
RNS Number:9365R 
Ashmore Group PLC 
27 February 2007 
 
The following replaces the Interim Results released today at 7.01 am under RNS  
no 9070R. The table under the heading "Operations and investment theme review"  
has been corrected. Three of the headings were transposed incorrectly. 
 
PRESS RELEASE 
 
 
 
27th February 2007 
 
 
Ashmore Group plc 
 
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 
31 DECEMBER 2006 
 
Ashmore Group plc today announces its first set of interim results since listing 
on 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 results 
of and the gain from disposal of the Group's administration company in December 
2005 from the comparative period. 
 
Commenting on the results Mark Coombs, Chief Executive Officer Ashmore Group 
plc, said: 
 
"The Group continues to focus on and deliver strong performance across its 
investment themes, increasing its assets under management and growing net 
management fees. These results demonstrate the excellent start Ashmore has made 
to life as a public company. The board is confident of the Group's prospects for 
the remainder of the financial year." 
 
Analyst briefing 
 
There will be a briefing for analysts and shareholders at 9.30 am GMT today at 
the offices of UBS at 1 Finsbury Avenue, London EC2M 2PP.  A conference facility 
can 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 March 
2007. 
 
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 4157 
Penrose Financial    Gay Collins          +44 20 7786 4888 / mobile 07798 626282 
Ashmore@penrose.co.uk 
 
 
Ashmore Group plc 
 
Chief Executive Officer's statement 
 
The results for the six months to 31 December 2006 demonstrate another period of 
strong growth and progress towards delivering the strategic objectives set out 
at 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 of 
US$6.7bn (33%) compared to June 2006. Net subscriptions were achieved across all 
the 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 raisings 
into new products and funds of US$2.5bn. There was net performance in the period 
of US$2.5bn. Inflows generated through investments into the Group's Multi 
Strategy Fund, which invests across the Group's investment themes, represented 
18% of the US$4.2bn total net inflows in the period. 
 
Net management fees in the period increased substantially and were 62% higher 
than the comparative period in the prior financial year reflecting the strong 
growth in AuM. The Group's net management fee margin for the six-month period to 
31 December 2006 on an annualised basis was 90 basis points (bp) compared to 
88bp for the six months to 31 December 2005 and 83bp for the twelve-month period 
to 30 June 2006. 
 
The Group continues to deliver strong investment performance. As anticipated at 
the time of the Group's IPO, crystallised performance fees during the financial 
year to 30 June 2007 are expected to be substantially lower than those 
crystallised in the prior year. Crystallised performance fees in the six months 
to 31 December 2006 were £8.2m (six months to 31 December 2005: £38.1m). This is 
mainly due to the investment performance in EMLIP, a US$4.6bn AuM global US 
dollar debt fund, where investment performance in the performance year ended 
August 2006 was in line with the hurdle rate, rather than exceeding it as it had 
done in the prior year. 
 
Costs continue to be tightly controlled. Against the backdrop of substantial 
revenue growth, appropriate investment has been made, and will continue to be 
made, in infrastructure and various support functions.  The Group's variable 
compensation as a percentage of earnings before tax, interest and variable 
compensation was 16.4% for the six months to December 2006 (six months to 
December 2005: 22.5%). At the time of the IPO, the Group indicated that in the 
current financial year this ratio could potentially be at the bottom of or even 
slightly below its medium term target range of 20% to 25%. This guidance target 
range remains in place for future years. 
 
Overview of financial results 
 
The Group's operating profit margin for the six months to 31 December 2006 was 
78% (six months to December 2005: 73%) as it benefited from the lower variable 
compensation ratio. The Group continues to plan the development of its 
activities as a relatively high margin asset management business. 
 
The Group reported profit before taxation of £60.2m in the six-month period to 
31 December 2006, compared with £59.0m for the corresponding period in 
the previous financial year. This represents a headline increase of £1.2m (2%). 
 
In underlying terms, pre-tax profit rose by 13%. The underlying figures are 
calculated by excluding the impact of foreign exchange movements (predominately 
the weaker US dollar relative to sterling) net of hedging (£2.1m), and stripping 
out from the prior year figures the results from the Group's administration 
company (pre-tax profit £0.8m) and the gain on disposal from the sale of that 
company in December 2005 (£2.8m). 
 
Basic eps was 6.31p in the six-month period to 31 December 2006, compared to 
6.42p in the comparative prior year period. Eps in the prior period benefited 
from a lower tax charge arising as a consequence of the one-off gain on disposal 
of 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 four 
investment themes. 
 
---------------------------- 
 
 
                              US$bn               US$bn               US$bn               US$bn 
Investment theme          AuM as at           Net subs            Performance         AuM as at 
                            30/6/06                                                    31/12/06 
Global US$                     15.2                1.3                  1.8                18.3 
Local currency                  3.0                0.4                  0.4                 3.8 
Special Sits                    1.3                1.5                  0.1                 2.9 
Equity                          0.6                1.0                  0.2                 1.8 
Total                          20.1                4.2                  2.5                26.8 
 
 
Global US$ 
 
The Global US$ investment theme comprises US$ and other hard currency 
denominated instruments, investing principally in sovereign bonds but with a 
growing 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 30 
June 2006. Net subscriptions in the six-month period were US$1.3bn, with 
performance contributing US$1.8bn to the growth in AuM. 
 
During the period there were strong net inflows into the theme's public 
open-ended funds. In addition, a new structured product initially funded at 
US$0.2bn. 
 
Local currency 
 
The local currency investment theme comprises local currency and local currency 
denominated debt instruments. 
 
AuM at 31 December 2006 were US$3.8bn, an increase of US$0.8bn (27%) from 
30 June 2006. Net subscriptions were US$0.4bn, with performance contributing 
US$0.4bn. 
 
Net subscriptions and performance contributed equally to AuM growth in the 
period. As part of the process of accessing the increasing European appetite for 
the local currency theme, a new targeted SICAV fund was launched during the 
period and this initially funded at US$0.1bn.The public open-ended funds in the 
theme continued to attract new monies. 
 
Special Situations (distressed debt/private equity) 
 
The special situations (distressed debt / private equity) theme comprises 
investments in debt and /or equity or other instruments focussing on situations 
usually involving specialist corporate investments and /or projects and 
including distressed assets or distressed sellers of assets, often incorporating 
restructuring, reorganisations and/or a private equity approach. 
 
AuM at 31 December 2006 were US$2.9bn, an increase of US$1.6bn (123%). Net 
subscriptions were US$1.5bn, with performance contributing US$0.1bn. 
 
The Group's GSSF3 fund, which was launched in August 2006, represented US$1.4bn 
of the total net subscriptions in the period. 
 
Equity 
 
The equity investment theme comprises emerging market equity and equity related 
securities. 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 of 
US$1.2bn (200%) from 30 June 2006. Net subscriptions were US$1.0bn, with 
performance contributing US$0.2bn. 
 
Net subscriptions in the period were bolstered by US$0.8bn inflows from new 
segregated accounts. 
 
Cash flow and balance sheet 
 
The Group's cash flow statement demonstrates the strong cash flow 
characteristics of the business. 
 
The Group generated a £25.2m increase in its cash and cash equivalents in the 
six-month period to 31 December 2006. 
 
The Group continues to maintain a strong balance sheet to meet regulatory 
capital, commercial and development requirements. 
 
Dividend 
 
A 'maiden' interim dividend of 2.30p for the six-month period to 31 December 
2006 will be paid on 27 April 2007 to shareholders on the register on 30 March 
2007. 
 
Strategy 
 
The Group's strategy, which was articulated at the time of the Group's IPO, is 
to be the leading emerging markets asset manager across an increasingly broad 
range of investment themes by maintaining a market-leading investment track 
record, delivering growth and enhancing diversification of earnings, 
facilitating controlled growth and developing further the Ashmore brand and 
business model. 
 
Trading outlook 
 
Trading conditions in the six months to 31 December 2006 remained satisfactory 
with global liquidity and strong fundamentals in emerging markets continuing to 
be positive for the Group's investment themes. The Group continued to attract 
net subscriptions across all its investment themes and its track record of 
delivering 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 global 
credit worthiness should continue to underpin growth across emerging market 
asset classes. 
 
We believe that Ashmore's experience and expertise in emerging markets asset 
management, coupled with its demonstrable investment track record, position the 
Group well to benefit from the further demand for emerging market products. The 
board is confident of the Group's prospects for the remainder of the financial 
year. 
 
About Ashmore Group plc 
 
Ashmore is one of the world's leading emerging market investment managers with a 
history of consistently outperforming the market. Ashmore specialises in a 
number of emerging market investment themes: dollar denominated debt, local 
currency and local currency debt, special situations, incorporating distressed 
debt 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              80.8 
Performance fees                                       8.2               38.1              54.2 
Other revenue                                          7.9                0.2               2.9 
Total revenue                                         73.9               73.7             137.9 
Less: 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               2.8 
Interest income                                        4.0                2.9               6.5 
Interest 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              71.5 
Minority interest                                        -                0.1               0.1 
Profit for the period                                 42.0               42.6              71.6 
 
Earnings per share: 
 
Basic                                                6.31p              6.42p            10.82p 
Diluted                                              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 
 
Assets 
Property, plant and equipment                                   0.2             0.2              0.2 
Intangible assets                                               4.1             4.1              4.1 
Other receivables                                               0.1             5.2              3.6 
Deferred 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             20.0 
Derivative financial instruments                                0.5               -              1.3 
Cash and cash equivalents                                     157.9           107.0            132.7 
 
Total current assets                                          196.6           131.6            154.0 
Total assets                                                  212.5           141.5            163.5 
 
Equity 
Issued capital                                5                   -               -                - 
Share premium                                                   0.3             0.3              0.3 
Retained earnings                                             154.3            91.6             96.3 
 
Total equity                                                  154.6            91.9             96.6 
 
Liabilities 
Deferred tax liabilities                                          -             3.3              0.1 
Total non-current liabilities                                     -             3.3              0.1 
 
Current tax                                                    15.3            12.6             18.0 
Derivative financial instruments                                  -             0.6              0.1 
Trade and other payables                                       42.6            33.1             48.7 
 
Total current liabilities                                      57.9            46.3             66.8 
Total liabilities                                              57.9            49.6             66.9 
Total 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       42.6 
Disposal 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            -       29.0 
Share based payments             -            -         10.7              10.7            -       10.7 
Dividends                        -            -       (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            -       42.0 
Share based payments             -            -          1.2               1.2            -        1.2 
Deferred tax                     -            -          9.5               9.5            -        9.5 
Current tax                      -            -          4.2               4.2            -        4.2 
Sale 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              £m 
Operating activities 
 
Cash receipts from customers                                    62.1            60.2           151.7 
Cash 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 activities 
Interest received                                                3.9             2.5             6.1 
Dividends received from subsidiary                                 -               -             1.4 
Net 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 accounts 
within the meaning of Section 240 of the Companies Act 1985. The financial 
statements have been prepared in accordance with IAS 34 'Interim Financial 
Reporting' and the Listing Rules of the Financial Services Authority (FSA). 
 
The accounting policies applied in these interim financial statements are 
consistent with those applied in the Group's prospectus, prior to the official 
listing 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 financial 
year attributable to equity holders of the parent by the weighted average number 
of ordinary shares in issue during the year. 
 
Diluted earnings per share is calculated as for basic earnings per share with a 
further adjustment to the weighted average number of ordinary shares to reflect 
the effects of all dilutive potential ordinary shares. 
 
There is no difference between the profit for the financial year attributable to 
equity holders of the parent used in the basic and diluted earnings per share 
calculations. 
 
Reconciliation of the figures used in calculating basic and diluted earnings per 
share: 
 
 
                                                  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   660,200,000 
Effect of dilutive potential ordinary shares -           
share options                                           38,281,264        9,562,343    26,859,915 
Weighted 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 Income 
Statement 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, or 
in the case of a final dividend when approved by the shareholders. 
 
Dividend per share figures are restated to reflect current share structure as 
described above. 
 
The board has approved an interim dividend for the six months ended 31 December 
2006 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 allotted 
Allotted, 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 pari 
passu in respect of participation and voting rights. During the year the 
following events occurred: 
 
On 23 June 2006 the company issued bonus shares in the amount of 24 ordinary 
shares 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 of 
1p 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 to 
the allotment of ordinary shares of 0.01p in the company. The exercise period 
for these options ranges from December 2005 to April 2016 and the allotment 
price ranges from 0.52p to 24.24p. 
 
At 31 December 2006 there were 38,246,671 options in issue with contingent 
rights to the allotment of ordinary shares of 0.01p in the company. The exercise 
period for these options ranges from December 2005 to December 2016 and the 
allotment price ranges from 0.52p to 170p. There are also restricted share 
awards issued under the Omnibus scheme totalling 2,009,522 shares that have a 
release date in November 2011. 
 
6)     Own shares 
 
The Ashmore 2004 Employee Benefit Trust (EBT) was established to encourage and 
facilitate the acquisition and holding of shares in the company by the employees 
of the company with a view to facilitating the recruitment and motivation of the 
employees of the company. As at the period end, the EBT owned 38,725,000 
ordinary 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 make 
these shares available to employees by way of sale through the share option 
scheme. 
 
7)     Exchange rates 
 
The only foreign exchange rate which has a material impact on the reporting of 
the 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 the 
six months ended 31 December 2006 which comprises the consolidated income 
statement, consolidated balance sheet, consolidated statement of changes in 
equity and consolidated cash flow statement and the related notes.  We have read 
the other information contained in the interim report and considered whether it 
contains any apparent misstatements or material inconsistencies with the 
financial information. 
 
This report is made solely to the company in accordance with the terms of our 
engagement to assist the company in meeting the requirements of the Listing 
Rules of the Financial Services Authority. Our review has been undertaken so 
that we might state to the company those matters we are required to state to it 
in this report and for no other purpose. To the fullest extent permitted by law, 
we do not accept or assume responsibility to anyone other than the company for 
our review work, for this report, or for the conclusions we have reached. 
 
Directors' responsibilities 
 
The interim report, including the financial information contained therein, is 
the responsibility of and has been approved by the directors. The directors are 
responsible for preparing the interim report in accordance with the Listing 
Rules which require that the accounting policies and presentation applied to the 
interim figures should be consistent with those applied in preparing the 
preceding annual financial statements except where any changes, and the reasons 
for them, are disclosed. 
 
Review work performed 
 
We conducted our review in accordance with guidance contained in Bulletin 1999/4 
Review of interim financial information issued by the Auditing Practices Board 
for use in the United Kingdom. A review consists principally of making enquiries 
of group management and applying analytical procedures to the financial 
information and underlying financial data and, based thereon, assessing whether 
the accounting policies and presentation have been consistently applied unless 
otherwise disclosed. A review is substantially less in scope than an audit 
performed in accordance with Auditing Standards and therefore provides a lower 
level of assurance than an audit. Accordingly, we do not express an audit 
opinion on the financial information. 
 
Review conclusion 
 
On the basis of our review we are not aware of any material modifications that 
should be made to the financial information as presented for the six months 
ended 31 December 2006. 
 
KPMG Audit Plc 
Chartered Accountants 
27 February 2007 
 
 
 
 
 
                      This information is provided by RNS 
            The company news service from the London Stock Exchange 
END 
 
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