REG-Ashmore Group Plc PRELIMINARY RESULTS FOR YEAR - Part 1

Released : 16/09/2008

http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20080916:RnsP4544D
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RNS Number : 4544D  
  
Ashmore Group PLC  
  
16 September 2008  
  
Press release  
  
Ashmore Group plc  
  
16 September 2008  
  
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008  
  
Ashmore Group plc, one of the world's leading emerging market investment 
managers, today announces its audited results for the year ended 30 June 2008.  
  
Financial highlights  
  
 
 * Assets under management (AuM) of US$37.5 billion at 30 June 2008, up US$5.9 
billion, 19% in the year  
  
 
 * Net management fees of £182 million, 44% higher than for the year ended 30 
June 2007  
  
 
 * Performance fees of £44.7 million (£20.4 million for the year ended 30 June 
2007)  
  
 
 * Operating margin of 76% (2007: 76%)  
  
 
 * Profit before tax of £196.2 million, up 49%  
  
 
 * Basic eps up 53% to  21.0p (2007: 13.7p) and diluted eps of 19.9p (2007: 
12.9p)  
  
 
 * A final dividend of 8.34p per share will be paid on 5 December 2008, giving a 
total dividend for the year of 12.0p (2007: 9.0p)  
  
Operational highlights  
  
 
 * Ashmore launched its fifth investment theme, emerging corporate high 
yield,which offers investors a risk return profile distinct from other segments 
of emerging market fixed income.   
  
 
 * The launch of a permanent capital vehicle in December 2007 (Ashmore Global 
Opportunities Limited) through which E 500 million was raised. Provides broader 
access to the special situations theme via a listed vehicle with daily liquidity 
and pricing.  
  
 
 * A dedicated Brazilian local currency fund was launched in January 2008, 
managed by our newly established fund management subsidiary in Sao Paulo. This 
was followed in April 2008 by the launch of a Brazilian onshore local currency 
fund targeting domestic institutional investors.   
  
 
 * The fourth Global Special Situations Fund (GSSF4) closed in October 2007 with 
commitments of US$1.4 billion. At 30 June 2008 it was 70% drawn down and it has 
since become fully drawn. Marketing began in June 2008 for the next special 
situations fund GSSF5.  
  
 
 * Significant infrastructure initiatives have been put in place, aimed at 
providing the Group with development, continuity and expansion to enable the 
execution of strategic plans.    
  
Mark Coombs, Chief Executive Officer, Ashmore Group said:   
  
"This year's results underline the continued progress and satisfactory growth of 
the company. We have continued to make progress from an operational point of 
view with fund launches, further product innovation and the implementation of 
significant infrastructural initiatives that includes beginning to develop local 
asset management operations in some of the world's key emerging markets.  
  
The world has not been the most comfortable place this year and will continue to 
be challenging. However, these conditions provide Ashmore with major 
opportunities. The market currently offers more value and transactional scope 
available to us to invest for strong medium term returns over the next 12-24 
months than at any time over the previous 5 years.  Our task is to continue 
persuading investors to allocate us capital and allow us to execute strategies 
to capture that value."  
  
Analyst/investors briefing  
  
There will be a presentation for analysts at 09.00 on 16 September at the 
offices of Goldman Sachs at Peterborough Court, 133 Fleet Street, London EC4A 
2BB. A copy of the presentation will be made available on the Group's website at 
www.ashmoregroup.com  
  
Contacts  
  
For further information, please contact:  
  
Ashmore Group plc                                                   +44 20 3077 
6000  
  
Graeme Dell   
  
Group Finance Director  
  
Penrose Financial                                                     +44 20 
7786 4888  
  
Gay Collins                                                              +44 
7798 626 282  
  
Lauren Stewart    +44 20 7786 4835  
  
Stefanie Theis     +44 20 7786 4859  
  
Or email ashmore@penrose.co.uk  
  
Ashmore Group plc  
  
Chairman's statement  
  
A review of the Group's financial and operational highlights demonstrate a year 
of excellent progress. The profit before tax was £196.2 million against £131.4 
million for the previous year, an increase of 49%. These results are highly 
satisfactory, particularly as they have been achieved against a background of 
extreme volatility in the global financial markets.    
  
The Group's core capabilities of product innovation, asset raising, delivering 
good investment performance and excellent client service have again continued to 
be demonstrated. During this period we have worked extensively on building a 
stronger infrastructure platform for the further development of the business 
going forward. In addition in line with our strategy we are beginning to develop 
a local asset management presence on the ground in a number of the key emerging 
markets in which we participate to enable the Group to benefit from the 
development of these markets. All of these areas will be expanded upon further 
in the Chief Executive Officer's statement and Business Review that follow.   
  
Recognising the continued strong progress and our confidence in the Group's 
prospects the directors are recommending a final dividend of 8.34p for the year 
ended 30 June 2008 and, subject to shareholder approval, this will be paid on 5 
December 2008 to all shareholders who are on the register on 7 November 2008. 
This makes a total dividend of 12.0p for the year (2007 - 9.0p) an increase on 
last year of 33%.  
  
We were delighted to welcome Graeme Dell to the Board in December as Group 
Finance Director. Graeme has brought with him significant listed company 
experience and has made an immediate contribution to the Board and its 
governance processes.  Additionally we were pleased that Jonathan Asquith joined 
our Board on 1 September 2008 as an independent non-executive director. Jonathan 
has a wealth of experience in our industry having been Vice Chairman and Chief 
Financial Officer at Schroders plc and has also held a number of senior 
positions in the investment banking sector . I have no doubt that he will be a 
considerable asset to our Board. The Group expects to further strengthen the 
Board by the appointment of additional non-executive directors and continues to 
be actively engaged in this process. Jon Moulton who has served on our Board 
since 1999 will retire and not seek re-election at the AGM and, on behalf of the 
Board, I would like to express our gratitude for his service and counsel over 
this period.     
  
To build a first class asset manager requires a team of the highest calibre 
committed to delivering consistently good investment performance and client 
service. This year's results confirm my belief that Ashmore has such a team. In 
addition, the Group's strategic position, focusing exclusively on emerging 
markets combined with the team's long history of managing these assets through 
many periods of extreme market volatility, represents a significant opportunity. 
Whilst the markets may present further challenges I am confident that the Group 
is ready to meet them and to deliver on its strategy.   
  
Michael Benson  
  
Chairman  Chief Executive Officer's statement  
  
The Group results for the year ended 30 June 2008 are satisfactory from a number 
of perspectives. Firstly in absolute financial terms they demonstrate the 
further progress made against the results of prior periods and our own 
forecasts. Secondly we have continued to make progress from an operational point 
of view with fund launches, further product innovation and the implementation of 
significant infrastructural initiatives aimed at developing an even more robust 
platform for the Group's  continued development. Finally, we have undertaken 
further steps to begin to develop a network of local asset management operations 
in some of the world's key emerging markets. This has all taken place in global 
financial market conditions judged by many commentators to be as difficult as 
any they can remember which have both made the execution of an active style of 
investment management a greater challenge and generally reduced investor 
appetite for risk. I will expand upon these in my report and then outline the 
strategic rationale and some of the emerging market dynamics that we believe 
position the Group well for future success.   
  
Assets under Management ("AuM") and financial performance  
  
At the end of the previous financial year, 30 June 2007, AuM stood at US$ 31.6 
billion. Through net subscriptions of US$ 3.0 billion and investment performance 
of US$ 2.9 billion we have reached a closing level for AuM at 30 June 2008 of 
US$ 37.5 billion. As we forecast the AuM growth has been strongest in our local 
currency theme where overall levels of AuM were 70% higher (at US$ 8.5billion at 
the end of the period) than a year earlier, followed by special situations where 
AuM have grown by 62% to US$ 5.5 billion over the period. The AuM growth within 
these two themes is in line with our view of the significant future opportunity 
they present. Our dollar debt theme has seen gross subscriptions exactly matched 
by redemptions, so growth in this theme arises from investment performance of 
US$ 1.5 billion, and, as anticipated and targeted several of the redemptions in 
this theme have been prompted by reallocation into local currency mandates where 
there are opportunities for higher returns. The equity theme has completed a 
difficult year in line with global equity markets and whilst the investment 
performance has been flat, there have been redemptions as investors have 
allocated away from equities resulting in a US$ 1.2 billion reduction in AuM.   
  
The overall growth in AuM has driven the Group's 44% increase in net management 
fee income to £182 million in the year to 30 June 2008 (year ended 30 June 2007: 
£126.4 million). The Group remains focused on the delivery of a high proportion 
of its overall revenue from high margin management fees. Performance fee income 
has also increased significantly to £44.7 million, an increase of 119% from 
£20.4 million in the previous year which has been delivered across all our 
investment themes. These two principle sources of revenue together with other 
income result in strong growth in our overall net revenue by 50% to £240.0 
million (year ended 30 June 2007: £159.8 million). After costs of £58.8 million 
(year ended 30 June 2007: £38.1 million) and interest income of £15.0 million 
(year ended 30 June 2007: £9.7 million) this results in a profit before tax of 
£196.2 million, an increase of 49% in the year (year ended 30 June 2007: £131.4 
million). Basic earnings per share for the year was 21.0p (2007: 13.7p), a 53% 
increase in the year.  
  
Operational delivery  
  
From an operational perspective in the area of fund launches and product 
innovation the year began with the launch of our fourth global special 
situations fund ("GSSF4") which closed with commitments totalling US$ 1.4 
billion. Thereafter, developments in emerging markets corporate debt, following 
significant repricing in these markets, provided Ashmore with the opportunity to 
launch a dedicated corporate high yield fund and establish it as a new 
investment theme in October 2007 offering enhanced levels of return with a low 
correlation to the dollar debt theme. We expect this to grow over time as the 
credit markets stabilise.    
  
In December 2007 we completed the launch of a permanent capital vehicle, Ashmore 
Global Opportunities Limited,  
through which we raised E 500 million via a listing on the London Stock 
Exchange. This fund was established to focus on the special situations theme 
enabling a new client base to invest in this theme via a listed vehicle with 
daily  
liquidity and pricing. It contributed US$ 250 million of the GSSF4 commitments 
and will be provided allocations in  
future special situations funds.   
  
In January 2008 we launched a dedicated Brazilian local currency fund domiciled 
in Guernsey managed by our newly established fund management subsidiary in Sao 
Paulo. This was followed in April by the launch of a Brazilian onshore local 
currency fund targeting domestic institutional investors which, in line with the 
strategy previously outlined, the Group seeded in the amount of BRL49.3 million 
(£15.1 million).   
  
Investment activity within the special situations theme had resulted in GSSF4 
being 70% drawn down at 30 June 2008 and it has since become fully drawn. Given 
the significant ongoing investment opportunities within this theme, we announced 
in June 2008 the beginning of marketing the next special situations fund GSSF5 
which we expect to close in the new financial year.   
  
The year has also been a busy one in the area of infrastructure projects, the 
implementation of a new fund accounting system, the migration of fund 
administration services for the Group's global public funds to a single service 
provider and in May 2008 the relocation of the entire London based staff to a 
new office. In all cases these projects were executed following months of 
planning by multi-disciplinary teams and are aimed at providing the Group with 
development, continuity and expansion to enable us to execute our strategic 
plans.   
  
Strategic positioning  
  
The Group's strategy remains consistent; to deliver long term investment 
outperformance; generate and diversify net management fee income through the 
attraction of net subscriptions across an increasing variety of investment 
themes; and develop the Ashmore brand and business. In evaluating our progress 
toward the achievement of our strategic goals and evaluating the future 
opportunity available we consider all of these across three phases of 
development - establishment, diversification and emerging market capital 
mobilisation.   
  
The first of these phases is largely completed: establishing the emerging market 
fixed income asset class; educating the investor base; refining the investment 
processes and creating the performance track record to attract the investment of 
developed world capital into the emerging markets.  
  
The second phase continues to apply to the management of developed world capital 
into emerging markets as we grow our AuM diversifying by investment themes, 
product structures, investor type, investor geography and distribution route. 
This is an ongoing process where we have a great deal more to do in all areas 
and which offers much potential for growth.   
  
The third phase of our strategy diversifies the origin of funds that we manage 
looking toward the capital pools that we consider will grow the most and we 
believe can be mobilised within the emerging markets themselves. In this phase 
we first use the existing Ashmore central investment processes and funds to 
manage capital from the largest emerging world sources of capital cross border 
into other emerging markets. Initially this comes from central banks, 
governments/reserve managers and sovereign wealth funds and gradually expands to 
other domestic institutions. Thereafter we expect to progressively establish 
local asset management operations in a number of the world's key emerging 
economies using our expertise, investment processes and track record to manage 
domestic capital within these markets. This will enable us to participate in the 
significant long term growth opportunity available in these markets both by 
investing funds from offshore but also developing onshore investment management 
by Ashmore and its subsidiaries.   
  
Investor allocations to emerging markets  
  
Whilst the first phase - establishment - is largely complete, there is 
significant future potential for strong growth in the second - diversification - 
phase.   
  
One of the major driving forces of future growth is the macro one, based on the 
low allocations that investors from the developed world have so far made to 
emerging markets, and how these will change in the future as those markets 
outgrow the developed world. We believe that an average institutional investor 
may currently have an emerging market allocation across investment themes 
anywhere in the broad range of five to fifteen percent whilst a progressive 
investor may have an allocation at double these levels. This compares with the 
emerging markets contribution to the global economy at  between fifteen and 
twenty-five percent when measured by either GDP, equity or bond market 
capitalisation levels. Over the next ten years or so we would expect the 
emerging market contribution to increase to over 50% of the overall global 
economy by all these measures so the opportunity for current and future 
allocations to grow dramatically is very clear. We are well positioned  to 
benefit from this allocation shift as we have a long history of total focus on 
emerging markets across all available asset classes and a commitment to broaden 
our capability in these and new asset classes.  
  
Another driver for growth in this second - diversification - phase is the 
development of the local currency markets, and this is also one of the principal 
areas we see having a significant impact upon the pace with which emerging 
markets capital mobilisation - our third phase - is progressing.   
  
Local currency debt and local asset management operations  
  
Ashmore's local currency theme AuM is undergoing the strongest absolute growth 
of any of our themes. We believe that this is set to continue and should 
establish it as our largest theme by volume within three years. In fact, we 
continue to encourage our dollar debt investors to diversify with us into this 
theme. The underlying local currency debt markets are believed to total over US$ 
6 trillion at the end of 2007 - already five times the size of the external debt 
market in which Ashmore's dollar debt theme invests. As local currency markets 
mature and their liquidity and duration measures increase we expect to see 
increased international investment into these markets coming from both developed 
world investors and intra-emerging market flows. These latter flows typically 
form the first part of our mobilisation of emerging markets capital phase. As 
highlighted above, the earliest movers in this phase are the largest sources of 
capital from central banks, reserve managers and sovereign wealth funds. Ashmore 
is already managing local currency funds for a number of such organisations and 
we see further growth in the number and scale of these mandates in the future. 
Thereafter we would expect this trend to develop to include the larger 
institutions and pension funds in these economies. In order to capitalise on 
this trend, we believe that local asset management operations on the ground in a 
number of key emerging markets represent the other key to participating in the 
growth and development of the local currency and other markets.   
  
Our operations now include subsidiaries in Turkey and India that are active in 
the local mid-market private equity markets. During this year we have 
established a subsidiary operation in Brazil managing offshore and onshore local 
currency funds. Immediately after the financial year ended in July we received 
final stage approval in Turkey from the Capital Markets Board to establish and 
operate a regulated portfolio management business which began operations on 1 
August 2008. Whilst the financial impact of these operations was not material in 
context of the overall Group result for the year ended 30 June 2008, we believe 
going forward that the contribution from the local asset management operations 
that the Group establishes will gradually and progressively contribute 
meaningfully to the Group's results and valuation.   
  
Special situations: Opportunities and performance fees  
  
Ashmore's team have been investing in the special situations asset class, in 
both distressed debt and private equity forms, even before the Group's first 
fund was established in 1992, and the investment into this theme from all funds, 
where the investment mandate allows, has continued ever since. This long 
history, resultant specialist transaction experience and network of 
relationships throughout the emerging markets are keys to our strength in the 
area. As I have described above, the financial year ended 30 June 2008 saw the 
closing, drawing down and deployment of our fourth global special situations 
fund (GSSF4) and the launch of fundraising for our fifth global fund (GSSF5). 
The investment opportunity presented for this asset class going forward is very 
strong with a significant pipeline of attractive potential transactions, and 
particularly following the broad reduction of easy credit in the market.  
  
Our first global special situations fund (GSSF) matured after the financial year 
ended in July five years after its closing in July 2003, and the mechanics of 
the fund wind up are underway with first stage payments made to fund 
shareholders. As a result of strong investment returns the fund has generated a 
performance fee of between £15.6 million and £21.0 million which will be 
recognised in the financial year ended 30 June 2009, the final level being 
determined by the finalisation of the few remaining asset realisations.    
  
Our people and culture  
  
The operational highlights described in this report share many common features. 
Most striking amongst these is the role of the team at Ashmore, spread broadly 
throughout the organisation, in making the business a success. At 30 June 2008 
the Group's headcount stood at 93, an increase of 24 or 35% on the figure a year 
earlier, with additions across the Group's global functions in London, and in 
particular within local asset management operations. The Group places a 
tremendous focus on the process of recruiting like minded individuals from 
different backgrounds with a common desire to specialise in their field within 
the emerging markets. This takes time but is critical to our success. I should 
like to add my own thanks to those expressed in the chairman's report for the 
dedication and commitment that all those already in the Ashmore team have made 
into making the year and the business a success.    
  
Now we move onto next year and as the Group grows we continue to work hard in 
ensuring that this growth occurs in a controlled manner. Part of this is 
achieved through the recruitment of a broad team of varying talents and the 
implementation of initiatives and systems aimed at further strengthening our 
processes and controls. This is ongoing. At the heart of the organisation I 
believe that we retain and develop the Ashmore culture and work ethos which will 
enable us to execute on and benefit from the significant strategic opportunities 
that lie ahead. We have much to do, and execution will always be the key, but we 
continue to look forward to the challenges ahead.  
  
August 2008 annual performance fees  
  
Unaudited annual performance fees for the funds with annual performance years 
ended 31 August 2008 (including EMLIP and LCD) were £31.0 million (August 2007: 
£17.6 million) which will be recognised in the financial year ended 30 June 2009 
in addition to the GSSF fee detailed above.  
  
Outlook statement  
  
The world has not been the most comfortable place this year. The general market 
outlook continues to be difficult, deleveraging has been significant and 
continues and many investors are doing what they often do in times of 
stress......as little as possible, as a precursor to working out where to 
allocate their capital as things settle down.  
  
Against this market backdrop, since the year end the Group has experienced 
slightly lower subscription activity and some redemptions which, coupled with 
negative market performance, has resulted in a modest reduction in AuM. Given 
the margin profile of these assets, we remain confident that the revenue impact 
of this has been offset by the increased levels of fees elsewhere including 
those performance fees already recorded, demonstrating the Group's robust 
business model.  
  
It is these dynamics which provide us with both challenges and our major 
opportunity. We have more value and transactional scope available to us to 
invest for strong medium term returns over the next 12-24 months than at any 
time over the previous 5 years. Our task is to continue persuading investors to 
allocate us capital and allow us to execute strategies to capture that value 
particularly from local currency, in our special situations theme (in both 
distressed debt and private equity) and in corporate high yield as well as in 
our local asset management businesses.   
  
Mark Coombs  
  
Chief Executive Officer  
  
Business review  
  
The financial and operational highlights outlined above clearly demonstrate a 
year of further substantial progress towards the Group's strategic goals. In 
addition the Chief Executive Officer's statement provides an outline of the 
significant future opportunities for the Group. The financial and business 
review section that follows will provide a detailed account of the Group's 
activities and their financial impact.  
  
Key performance indicators    
  
Progress towards achieving the Group's strategic objectives is monitored with 
reference to a number of key performance indicators. These are set out below:  
  
 
  Key performance indicators                  Year ended   Year ended  
                                              30 June      30 June     
                                              2008         2007        
  Year end AuM                                US$37.5bn    US$31.6bn   
  Average AuM                                 US$35.3bn    US$26.4bn   
  Net management fee margins (basis points)   103bp        93bp        
  Operating profit margin                     76%          76%         
  Compensation/revenue ratio                  19.9%        20.4%       
  Variable compensation ("vc")/ebvcit         18.2%        18.4%       
  Year-end head count                         93           69          
  
  
Assets under Management  
  
As a result of further growth during the year, the Group's AuM as at 30 June 
2008 had reached the level of US$37.5 billion, the development of which is 
broken down as follows:-  
  
 
                           Year ended30 June 2008      Year ended30 June 2007     
                           US$ billions                US$ billions               
  Opening AuM                            31.6                        20.1         
  Gross subscriptions      11.0                        10.4                       
  Gross redemptions        (8.0)                       (2.1)                      
  Net subscriptions                      3.0                         8.3          
  Investment performance                 2.9                         3.2          
  Closing AuM                            37.5                        31.6         
  
  
As these figures highlight, the Group has continued to win good absolute levels 
of gross subscriptions through the period. Gross redemptions are clearly 
significantly higher than for the previous period. Measured as a percentage of 
average AuM this represents an increase to 22.5%, which we believe represents a 
long run industry average for an institutional fund management business. Whilst 
ahead of the levels we had seen over recent periods (2007: 8%; 2006: 15%; 2005: 
18%), given the extraordinary events in the global markets this had been 
anticipated.    
  
The number of funds and levels of AuM can be analysed according to the type of 
fund or mandate as outlined below. These changes demonstrate the continued 
product innovation and a further breakdown of these are provided in the 
investment theme reviews.  
  
 
                             Number of accounts          Percentage of AuM           
                             30June 2008   30June 2007   30June 2008   30 June 2007  
  Ashmore sponsored          24            16            56%           52%           
  Segregated                 16            14            31%           32%           
  Structured product         3             3             4%            6%            
  White label/dual branded   7             8             9%            10%           
  Total                      50            41            100%          100%          
  
  
Investor profile  
  
There are a broad range of investors in the funds managed by the Group.   
  
The funds which Ashmore manage remain predominately sourced from institutional 
investors. As at 30 June 2008, 88% of the Group's AuM was institutional (2007: 
85%) and 12% was high net worth individuals/retail (2007: 15%). The 
institutional investor profile includes pension plans, government agencies, 
financial institutions and corporates. The institutional segment showed an 
increase in the proportion of government investors (up from 12% to 15%). Public 
pension plan investors and corporate pension investors showed steady growth in 
the year and remained proportionately constant at 18% and 16% respectively.   
  
The geographical profile of the Group's investors remains diversified. During 
the year there was strong growth in the Middle East, with US$1.5 billion of 
subscriptions from this region. Europe also continued to show robust growth, 
with significant growth in the UK in particular.  
  
The AuM by investment theme under which the fund or mandate is organised is 
shown below:-  
  
 
                       AuM 30June 2008   AuM 30June 2007   Increase/(Decrease)  
                       US$ billions                        Percentage           
  Dollar debt          22.7              21.2              7%                   
  Local currency       8.5               5.0               70%                  
  Special situations   5.5               3.4               62%                  
  Equity               0.8               2.0               (60%)                
  Total                37.5              31.6              19%                  
  
  
The investment theme classification into dollar debt, local currency, special 
situations and equity is based upon the theme under which the principal asset 
class of the funds is organised and this is represented by percentage of total 
AuM below. The majority of dollar debt mandates have cross over capacity which 
represents the ability to invest a proportion of the funds within certain limits 
into individual assets within the local currency, corporate high yield and 
special situations themes. Therefore to obtain a more representative picture of 
the asset classes into which the Group was actually invested at 30 June 2008, we 
provide below the breakdown after taking into account the actual amounts 
invested in this manner.  
  
 
                         AuM % by theme                AuM % as invested           
                                                                                   
                         30 June 2008   30 June 2007   30 June 2008   30June 2007  
  Dollar debt            60%            67%            49%            54%          
  Local currency         23%            16%            26%            24%          
  Special situations     15%            11%            20%            16%          
  Equity                 2%             6%             2%             6%           
  Corporate high yield   -              -              3%             -            
  
  
In line with the strong levels of growth within the local currency and special 
situations themes the Group's dollar debt theme is reducing significantly as a 
proportion of overall AuM classified by theme. When this is viewed in terms of 
invested asset class after taking cross over investment into account the dollar 
debt percentage is less than half of the Group's AuM.  
  
Investment theme reviews  
  
The following reviews of each of the principal investment themes provide details 
of the AuM development, investment performance, management fee income, 
management fee margin levels and performance fees:-  
  
Dollar debt  
  
The dollar debt investment theme comprises principally US dollar and other hard 
currency denominated instruments, which may include derivatives, investing 
mainly in sovereign bonds.  
  
 
                                 Year ended          Year ended         
  Dollar debt                    30th June 2008      30th June 2007     
  AuM opening (US$bn)                      21.2                15.2     
  Subscriptions (US$bn)          4.8                 5.9                
  Redemptions (US$bn)            (4.8)               (1.8)              
  Net subcriptions (US$bn)                 (0.0)               4.1      
  Performance (US$bn)                      1.5                 1.9      
  Closing AuM (US$bn)                      22.7                21.2     
                                                                        
  Net management fees (£m)                 91.0                71.9     
  Management fee margins (bps)             82.0                76.0     
  Performance fees (£m)                    17.1                5.8      
  
  
AuM at 30 June 2008 were US$22.7 billion, an increase of US$1.5 billion (7%) 
from 30 June 2007, which was solely attributed to performance achieved in the 
year. The subscriptions of US$4.8 billion include a new segregated mandate won 
from a European pension fund.   
  
Net management fees showed strong growth, with an increase of £19.1 million 
(27%) from the previous year as the theme's margin also increased to 82 basis 
points, from 76 basis points in the financial period to 30 June 2007, continuing 
the trend of high and stable net management fee margins.   
  
Performance fees achieved increased by £11.3 million (195%) compared to the 
previous financial year. This was predominantly due to the August 2007 annual 
performance fee delivered by EMLIP of £8.2 million (August 2006; £0.3 million) 
The remaining performance fees arose from the annual performance fees of the 
other dollar debt funds and crystallised fees following redemptions during the 
performance year.    
  
Local currency  
  
The local currency investment theme comprises local currency and local currency 
denominated debt instruments, principally sovereign in nature, and it may 
include derivatives.  
  
 
                                 Year ended        Year ended       
  Local currency                 30 June 2008      30 June 2007     
  AuM opening (US$bn)                     5.0               3.0     
  Subscriptions (US$bn)          4.2               1.7              
  Redemptions (US$bn)            (1.6)             (0.3)            
  Net subscriptions (US$bn)               2.6               1.4     
  Performance (US$bn)                     0.9               0.6     
  Closing AuM (US$bn)                     8.5               5.0     
                                                                    
  Net management fees (£m)                38.8              21.4    
  Management fee margins (bps)            119.0             108.0   
  Performance fees (£m)                   17.2              3.1     
  
  
AuM at 30 June 2008 were US$8.5 billion, an increase of US$ 3.5 billion (70%) 
from 30 June 2007. Good investment performance in this theme contributed US$0.9 
billion.   
  
There has been strong demand for the Group's local currency products with 
subscriptions in the period of US$4.2 billion, an increase of 147% from the 
previous year. The number of funds within the local currency theme has increased 
this financial year, with five additional funds introduced to capitalise on the 
opportunities the theme presents. Firstly, a Turkish debt fund was launched in 
November 2007, accessing local currency funds. During 2008 two Brazilian funds 
have also been established by the Group's local asset management subsidiary to 
manage offshore and onshore local currency funds. Finally, two segregated 
mandates were won, one from an emerging market central bank.   
  
Strong growth was achieved within net management fees, as these increased from 
£21.4 million in the year ended 30 June 2007 to £38.8 million (81%) in the year 
ended 30 June 2008. Management fee margins continued the trend of steady growth 
from the previous year, moving from 108 basis points to 119 basis points.    
  
Performance fees achieved in the year increased by £14.1 million (455%) compared 
to the previous financial year. This was primarily due to the annual performance 
fee delivered by LCD of £9.4 million (2007: £ nil). Additionally, annual 
performance fees from other local currency funds and crystallised fees following 
redemptions during the performance year contributed towards the remaining 
performance fees that were attained.   
  
Special situations   
  
The special situations (distressed debt/private equity) theme comprises 
investments in debt and/or equity or other instruments focusing 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.  
  
 
                                 Year ended        Year ended       
  Special situations             30 June 2008      30 June 2007     
  AuM opening (US$bn)                     3.4               1.3     
  Subscriptions (US$bn)          1.8               1.8              
  Redemptions (US$bn)            (0.2)             0.0              
  Net subscriptions (US$bn)               1.6               1.8     
  Performance (US$bn)                     0.5               0.3     
  Closing AuM (US$bn)                     5.5               3.4     
                                                                    
  Net management fees (£m)                42.6              25.9    
  Management fee margins (bps)            184.0             171.0   
  Performance fees (£m)                   7.2               7.5     
  
  
AuM at 30 June 2008 were US$5.5 billion, an increase of US$2.1 billion (62%). 
Net subscriptions were US$1.6 billion, predominantly comprised of the Ashmore 
Global Special Situations Fund 4 ("GSSF4") which was launched with commitments 
totalling US$1.4 billion. As at 30 June 2008, 70% of this commitment had been 
drawn down, with 100% drawn down by July 2008. In June marketing began for the 
fifth Global Special Situations Fund ("GSSF5"). Additionally the Group completed 
funding of an Indian fund, which is active in the local mid-market private 
equity markets.   
  
Net management fees increased by £16.7 million (64%) to £42.6 million, following 
the GSSF4 fund launch and the growth in AuM within the Asian Recovery Fund 
("ARF"). Management fee margins continued the trend of steady growth from the 
previous period, moving from 171 basis points to 184 basis points, reflecting 
the increased proportion of special situations funds with a 2% management fee.  
  
Performance fees attained of £7.2m arose principally from the annual performance 
fee of the ARF fund. In the majority of special situations funds, performance 
fees accrue over the full fund life.  
  
The Group's strong network continues to source a significant pipeline of 
attractive potential transactions within this asset class.  
  
Equity  
  
The equity investment theme comprises public equity and equity-related 
securities. The instruments invested in by the funds can include equities, 
convertibles, warrants and equity derivatives.  
  
 
                                 Year ended      Year ended       
  Equity                         30June 2008     30 June 2007     
  AuM opening (US$bn)                    2.0              0.6     
  Subscriptions (US$bn)          0.2             1.4              
  Redemptions (US$bn)            (1.4)           (0.4)            
  Net subscriptions (US$bn)              (1.2)            1.0     
  Performance (US$bn)                    0.0              0.4     
  Closing AuM (US$bn)                    0.8              2.0     
                                                                  
  Net management fees (£m)               9.6              7.2     
  Management fee margins (bps)           119.0            100.0   
  Performance fees (£m)                  3.2              4.0     
  
  
AuM at 30 June 2008 were US$0.8 billion, a decrease from the previous year of 
US$1.2 billion. This was as a result of significant allocations away from the 
equity theme. Following the reduction of funds, equity now represents 2% of the 
Group's overall AuM. The Group remains committed to growing this theme to 
represent a more significant proportion of overall AuM.   
  
Net management fees grew by 33% in the year, with net management fee margins 
increasing in this area by 19%. £3.2 million of performance fees were achieved 
(2007: £4.0 million), principally from the annual performance fees from AREF and 
AEEP of £1.9 million. Additionally, annual performance fees from other equity 
funds and crystallised fees following redemptions during the performance year 
contributed towards the remaining performance fees achieved.   
  
Corporate high yield   
  
During the 2008 financial year, Ashmore launched its fifth investment theme, 
emerging corporate high yield with the launch of the Ashmore Emerging Markets 
Corporate High Yield fund ("AEMCHY"). This launch recognised the fact that the 
asset class can offer investors a risk return profile distinct from other 
segments of emerging market fixed income. At the end of the financial year, 
AEMCHY had AuM of US$0.5 billion drawn principally from funds within the dollar 
debt theme.   
  
Multi-strategy funds, permanent capital vehicle and liquidity fund  
  
The five core investment themes for the Ashmore product range are supplemented 
by the multi strategy funds where Ashmore makes the asset allocation decisions 
across the investment themes. As at 30 June 2008, the total AuM within the five 
themes arising from the multi strategy funds and included within the theme AuM 
totals above was US$3.0 billion, an increase of 15% from the previous year.   
  
 
                              Year ended        Year ended      
  
  
More to follow, for following part double-click [nRn2P4544D]