Ashmore Group plc
6 September 2023
Results for the year ended 30 June 2023
Ashmore Group plc (Ashmore, the Group), the specialist Emerging Markets asset manager, today announces its audited results for the year ended 30 June 2023.
- Financial performance reflects early point in recovery cycle
- Assets under management (AuM) of US$55.9 billion1
- Positive performance of US$3.4 billion as Ashmore outperformed strong market returns
- Net outflow of $11.5 billion as a result of institutional de-risking, primarily by developed world investors
- Momentum building, higher performance and improved net flows in H2
- Adjusted net revenue of £195.4 million, 24% lower YoY and reflecting opening AuM 23% below prior year average AuM level
- Adjusted operating costs reduced by 4% YoY. Variable remuneration reduced by 24% YoY, representing 25% of EBVCIT
- Adjusted EBITDA of £106.2 million, 35% lower YoY, and adjusted EBITDA margin of 54%
- Profit before tax of £111.8 million, 6% lower YoY, benefiting from lower, unrealised mark-to-market seed capital losses and higher interest on cash balances
- Diluted EPS of 12.2 pence, 4% lower than in the prior year
- Consistent strong and liquid balance sheet with over £700 million of capital resources including c.£470 million of cash
- Final ordinary dividend maintained at 12.1 pence per share, to give total dividends per share of 16.9 pence
- Active management delivering outperformance in a stronger year for Emerging Markets
- Index returns of +2% to +11% over the 12 months
- Improving relative performance: 67% of AuM outperforming benchmarks over one year; 69% over three years; and 49% over five years (30 June 2022: 45%, 28% and 48%, respectively)
- Consistent strategy implementation with meaningful AuM growth available in each phase
- Phase 1 offers upside from higher allocations, particularly following a period of market volatility
- Phase 2 ongoing, diversification through equities, alternatives capital raising and cyclical upside from intermediary retail flows
- Phase 3 successfully delivering diversification benefits, and local markets network can expand over time. AuM from Emerging Markets clients increased by US$1.1 billion from 27% to 33% of Group AuM
- Clear opportunity for further recovery in Emerging Markets asset prices
- Consistent structural themes support long-term Emerging Markets growth, assets currently undervalued
- Emerging Markets have controlled inflation and central banks are cutting rates; GDP growth is significantly higher than in the developed world; China stimulus to counter weak consumer confidence
- Valuations remain highly attractive
Commenting on the Group's results, Mark Coombs, Chief Executive Officer, Ashmore Group said:
"Ashmore has delivered meaningful investment outperformance for clients this year and momentum is building as the recovery in Emerging Markets continues. While the Group's financial performance naturally lags this pick-up in markets and relative performance, as has been experienced after previous down cycles, the consistent strategy underpins Ashmore's medium-term growth potential and the business model is designed to mitigate the impact of market volatility.
"There is mounting evidence that the negative cycle has turned and, while the recovery may not be a straight line, it is well-supported by improving fundamentals across the larger emerging countries. Some investors remain cautious, but client activity levels are increasing and the combination of positive performance and attractive valuations available across Emerging Markets should drive capital flows over the medium term.
"Ashmore remains highly profitable, is delivering outperformance for clients and has a scalable operating platform, which means it is well-positioned to benefit from the ongoing recovery in Emerging Markets."
1. As reported on 14 July 2023.
Analysts briefing
There will be a presentation for sell-side analysts at 9.30am on 6 September 2023 at UBS, 5 Broadgate, London, EC2M 2QS. A copy of the presentation will be made available on the Group's website at ir.ashmoregroup.com.
Contacts
For further information please contact:
Ashmore Group plc
Tom Shippey, Group Finance Director +44 (0)20 3077 6191
Paul Measday, Investor Relations +44 (0)20 3077 6278
FTI Consulting
Neil Doyle +44 (0)7771 978 220
Kit Dunford +44 (0)7717 417 038
CEO review
Consistent strategy implementation
With the experience of more than 30 years of specialist investing, Ashmore's strategy is to capitalise on the long-term opportunitiesin Emerging Markets, and its established business model responds to the shorter-term impact of market volatility. Ashmore is delivering outperformance for clients and is well-positioned for an ongoing recovery in markets.
The past year provided encouraging evidence that the cyclical recovery has begun across Emerging Markets, with higher asset prices, an improving growth outlook, falling inflation and the benefits of a weaker US dollar. There remains, however, a degree of caution among some investors, particularly those in the US, given macroeconomic concerns such as policy tightening by developed world central banks and conflict or geopolitical tension in Europe and Asia. Additionally, the largest Emerging Market, China, needs to navigate the headwinds of lower consumer confidence and demand following the reopening of its economy.
Against this backdrop, Ashmore has delivered meaningful outperformance for clients and has continued to execute its long-term growth strategy, and its business model remains appropriate to manage the impact of market volatility. As has been experienced in previous cycles, after a period of challenging market conditions the Group's financial performance naturally lags the turn in markets and the delivery of investment outperformance. The Group started this financial year with AuM of US$64 billion, which was more than 20% below the level of average AuM in the prior financial year and therefore represented a notable revenue headwind for the current year. There was encouraging momentum over the year with client activity levels, net flows and investment performance higher in H2 compared with H1. Overall, lower average AuM resulted in a 35% YoY decline in adjusted EBITDA, but as a result of lower losses on the Group's seed capital investments and higher interest earned on cash balances, profit before tax was 6% lower and diluted EPS fell by 4%. Consequently, the Board has recommended an unchanged final ordinary dividend.
Undiminished long-term growth and investment opportunities in Emerging Markets
Irrespective of events in the short term, the longer-term potential of Emerging Markets remains undiminished. Superior economic growth is expected to continue as a result of powerful convergence trends with the developed world. These trends are supported by ongoing reforms, particularly the shift by larger countries to local currency funding and high-quality policymaking that delivers better economic management and greater resilience to external shocks. The resulting investment opportunities for a specialist, active manager are diversified across an investment universe spanning more than 70 emerging countries and with approximately US$75 trillion of fixed income securities and equity market capitalisation.
Appropriate strategy to deliver long-term growth
The Group's three-phase strategy is to capture these opportunities while seeking to protect the Group from some of the more significant challenges facing active asset managers such as the threat of passive competition. Inevitably, given the cyclical nature of markets, progress made in each of the three phases will vary.
Phase one
Risk aversion by some investors resulted in an adjustment to allocations to Emerging Markets in the year, yet this was more pronounced among developed world investors than those based in Emerging Markets. Ashmore's AuM from the latter increased over the year by US$1.1 billion and from 27% to 33% of total AuM.
While interest rates have increased in both developed and emerging countries, there is additional yield available in Emerging Markets that helps to compensate for higher risk, whether perceived or actual, and the merits of equity allocations are underpinned by the superior growth prospects of emerging economies. Therefore, as the market recovery continues, a broader range of investors is expected to recognise and act upon the attractive investment opportunities available in Emerging Markets fixed income and equities.
Phase two
Ashmore's objective is to diversify its business and revenue streams over time, and the current focus is on converting the strong equities investment performance into client flows, with encouraging activity levels picking up through the period; increasing alternatives AuM; and delivering growth in intermediary retail assets as risk appetite increases.
The AuM opportunity within each initiative is substantial, with the potential to deliver a significantly larger and more diversified business, thereby enhancing further the Group's resilience to market cycles.
Phase three
Ashmore has established a network of local asset management operations across six emerging countries, from Colombia in the west to Indonesia in the east. Collectively, they manage US$7 billion for domestic and international institutions and intermediary retail investors. Importantly, they provide the Group with diversification benefits, as seen tangibly this year with stable locally managed AuM compared with a decline for the Group's global business, and access to significant long-term growth opportunities as each country develops its capital markets and asset management industry.
Each business continues to develop according to its local strategy, with listed equities outperformance, investment realisations and further capital raising planned in Colombia; development of a broader product range and client diversification in Saudi Arabia; good investment performance and growing AuM in India; and investment outperformance and successful management of industry regulatory changes in Indonesia.
The success of Ashmore Indonesia illustrates the near-term development opportunity in these businesses, and the potential value creation for Ashmore's shareholders. With the Group's support, the management team established a highly profitable business of more than US$2 billion AuM, with significant employee equity ownership and a listing on the local Jakarta Stock Exchange. The business is currently valued at more than US$150 million.
Consequently, Ashmore has significant organic growth potential available in each of these countries and will pursue opportunities to expand the network over time.
Established business model to manage impact of market volatility
Ashmore has experienced many different market environments in more than 30 years of specialist investing in Emerging Markets and, while every cycle is different, its business model is designed to mitigate the impact of fluctuating AuM levels on its operational and financial performance.
The Board took the decision to increase the proportion of profits paid to employees in variable remuneration from 22.5% to 25.0% of EBVCIT. While in absolute terms the bonus pool is 24% lower, the higher percentage reflects the cumulative impact of three years of mostly challenging market conditions and consequently a significant reduction in AuM and pre-bonus profits. The Board remains mindful of achieving an appropriate balance between overall employee remuneration and the profits available to shareholders, and has recommended an unchanged final ordinary dividend this year.
Delivering strong investment performance
As described in the Market review, Emerging Markets benchmark indices delivered good returns for the year. In fixed income, Ashmore's value-based investment process delivered outperformance through active management and adding positions at attractive market levels over the past few years. Similarly, the main equities strategies have navigated the market volatility of recent years and delivered consistent outperformance, with a strong track record over one, three and five years. Overall, 69% of the Group's AuM is outperforming benchmarks over three years, a significant increase compared with 28% a year ago.
Ashmore has a well-established pattern of exploiting cyclical market weakness through active management embedding significant upside value in portfolios, and the subsequent market recovery leading to outperformance for clients. While the drivers of each cycle are different, Ashmore's consistent approach has again delivered a similar profile of investment performance in this cycle.
Employees
In recent years, Ashmore's employees have experienced significant changes in working practices, high levels of market volatility and a period of cyclically lower AuM and profits. Delivering performance for clients is the responsibility of all colleagues, not just the investment professionals, and therefore on behalf of the Board, I would like to thank each of them for their steadfast commitment to Ashmore's purpose, their expertise and high levels of professionalism, and maintaining the Group's highly effective team-based culture.
Positive outlook as the market cycle turns
There is mounting evidence that the negative cycle has turned and, while the recovery may not be a straight line, it is well-supported by improving fundamentals across the larger emerging countries, although notably China faces some headwinds from lower consumer confidence after reopening its economy. Some investors remain cautious, but client activity levels are increasing and the combination of positive performance and attractive valuations available across Emerging Markets should drive capital flows over the medium term, as has occurred after previous down cycles.
Ashmore is focused on pursuing its strategic growth objectives, while managing the business appropriately to mitigate the impact of market conditions and competitive pressures, and to deliver upside through operating leverage as AuM grows as a consequence of performance and client flows.
Ashmore remains highly profitable, is delivering outperformance for clients and has a scalable operating platform, which means it is well-positioned to benefit from the ongoing recovery in Emerging Markets.
Mark Coombs
Chief Executive Officer
5 September 2023
MARKET REVIEW
A stronger year in Emerging Markets
Conditions in Emerging Markets improved over the year, leading to fixed income returns of 6% to 11% and outperformance versus developed markets, and equities delivered a positive return of 2%. Near-term returns are underpinned by attractive valuations and further improvement in cyclical factors against a backdrop of structural growth.
After a weak first quarter in common with global capital markets, Emerging Markets rallied over the subsequent nine months to deliver positive returns for the year overall. This reflects the benefit of sound and effective monetary policies, lower debt levels than developed countries, tighter sovereign and corporate spreads over the period, and the positive impact of a weaker US dollar on local currency returns.
The year was characterised by the continued tightening of policy rates by central banks in response to high inflation, banking failures in the US and Europe, and ongoing conflict or geopolitical tension in Europe and Asia. Several important economic indicators underpinned the rally in Emerging Markets asset prices:
- GDP growth across Emerging Markets is expected to be significantly higher than in the developed world.
- After more than two years of tighter monetary policy, inflation is falling in Emerging Markets and interest rates are now higher than expected CPI inflation. The inflection point in the rates cycle has been reached, the credibility of most central banks is high, and monetary policy easing by Emerging Markets central banks is possible in the foreseeable future.
- The US dollar has enjoyed a prolonged bull run, which appears to have ended in 2022 as the weak underlying fundamentals in the US economy, and the prospect of a recession and correction in the equity market, put downward pressure on the currency.
The sections below present the recent performance and prospects for each of the main fixed income and equity asset classes.
External debt
The EMBI GD delivered a positive return of 7.4% over the 12 months, and the index spread over US Treasuries tightened by 110bps to 430bps. Although the first quarter saw a material drawdown (-4.6%) due to high inflation and hawkish central banks, the index delivered positive returns in each subsequent quarter. By region, Eastern Europe, Africa and Latin America performed well, while Asia and the Middle East lagged the index.
The HY index spread briefly exceeded 1,000bps early in the period, which historically is a level from which substantial positive returns are achieved over the following 12 months. Indeed, HY assets outperformed over the 12 months with a return of 11.8% compared with 3.4% for the IG index.
Some higher-yielding countries, such as Egypt and Sri Lanka, face challenges, but each situation is specific to the country in question and the path for each - in terms of avoiding default, undertaking a credible restructuring, or remaining in limbo without access to markets - depends as much on the domestic capacity for reform as it does on the global macro environment. The investment opportunity in each situation will be determined by the extent to which the various scenarios have been priced by bond and equity markets.
The US rate cycle is approaching its peak and the external debt asset class is set to outperform given its still wide spread by historical standards, a yield in excess of 8%, and substantial diversification available in an index comprising 69 countries and with 51% of bonds rated IG.
Local currency
The GBI-EM GD performed well with a return of 11.4% over the year, mostly through a rally in local markets with only 1% coming from stronger Emerging Markets currencies against the US dollar. The asset class has benefited from the early and effective monetary policy tightening pursued by many countries' central banks over the past couple of years, which has delivered macro stability and anchored inflation expectations in those countries, and also provided a path for policy easing in the foreseeable future. The index returns were particularly strong in Latin America and Eastern Europe, while Asia lagged. Weaker performance in the Middle East and Africa reflected the country-specific challenges in Egypt and South Africa.
The outlook for the US dollar is important to investor perceptions and performance of the local currency asset class. After a prolonged bull run, several factors point to a period of weakness in the US dollar, including large fiscal deficits, imbalanced external accounts and overly expensive currency and stocks, particularly in the context of a potential recession. For context, the trade-weighted real value of the US dollar peaked in 2022 only 10% below the 1985 Plaza Accord level and above the level reached around the dot-com bubble, thus representing one of the highest levels that the currency has seen in the past 50 years. In contrast, Emerging Markets currencies trade at attractive real effective exchange rate valuations.
Notwithstanding the returns delivered over the past 12 months, the local currency asset class continues to offer substantial value with an attractive yield of more than 6%, accelerating GDP growth and the potential for interest rate cuts in many of the 20 countries in the index if inflation continues to trend down.
Corporate debt
The CEMBI BD performed similarly to the sovereign market, with an investment return of 5.7% over the year supported by a tightening of spread from 400bps to 320bps. HY bonds outperformed with a return of 9.9% compared with 2.5% for IG bonds. In terms of regions, corporate assets performed strongly in Eastern Europe, with returns closer to the overall index performance in Latin America, Africa, Asia and the Middle East.
Default rates are low in Latin America, Africa and Middle East (less than 1%) and comparable to the US market. Higher default rates have been experienced due to policy tightening in China and as a consequence of the war in Ukraine, but it appears that overall default rates may have peaked in this cycle.
This asset class has characteristics that are superior to the equivalent US credit markets and, after a repricing of assets during the current interest rate cycle, underpin the relative value available in Emerging Markets corporate debt. These characteristics include:
- The index is highly diversified with more than 750 issuers across 63 countries. More than half (58%) of the bonds in the index are rated IG.
- Companies in Emerging Markets tend to have lower leverage compared with US and European peers, because management teams have a more conservative approach given the need to compensate for higher perceived country risk. Net leverage in the IG market is less than 1.5x EBITDA, compared with 2.5x to 3.5x in the US and Europe. There is a similar picture in the HY market, with net leverage of around 2x in Emerging Markets compared with 3.5x to 5x in the US and Europe.
- Despite lower leverage, Emerging Markets IG bonds offer a significant spread pick-up of 100bps per turn of leverage, compared with equivalent-rated US high-grade issuers.
- Similarly, the HY index offers an attractive yield of 9.5%, which despite the lower leverage is a point higher than the US HY market.
The above factors, when combined with the positive outlook for corporate earnings as a consequence of accelerating GDP growth and a supportive technical position given subdued new issuance, mean that the corporate debt asset class is well-positioned to deliver further positive returns over the medium term.
Equities
The MSCI EM index rose by 1.8% over the year, with the impact of tighter financial conditions in the first quarter and weaker than expected Asian economic data in the final quarter holding back returns compared with the fixed income markets. Frontier Markets were a little weaker (MSCI Frontier -2.8%), but small cap markets performed better, with the MSCI EM Small Cap index rising 13.3%.
After a challenging period in many countries, the outlook for equity market performance is positive. Importantly, aggregate GDP growth in emerging countries is expected to accelerate over the next few years, and consequently the premium to developed world growth will expand. Historically, there has been an understandable correlation between the relative performance of equity markets and economic growth differentials, which therefore provides a firm underpin to the asset class.
Against this backdrop of accelerating economic growth, the return opportunity in Emerging Markets equities reflects a combination of secular growth opportunities, particularly in Asian countries such as India and Indonesia, and other markets trading at substantial discounts to their history and fair value, for example in Latin America and China. Earnings growth expectations are modest, and in this context the substantial price/earnings ratio discount at which Emerging Markets equities trade to developed markets (11.0x compared with 18.5x for the S&P500) appears unjustified and supports outperformance of the asset class over the medium term.
Outlook
The structural drivers of growth in Emerging Markets are intact and underpinned by ongoing reforms in Asia, Latin America and Africa together with dominance over the world's natural resources and the supply chains necessary for energy transition. This is reflected in the continued superior GDP growth expected when compared with the developed world. However, this growth potential is not reflected in current valuations, providing investors with an opportunity to participate in the ongoing recovery in asset prices after a challenging few years in capital markets outside the US.
From a cyclical standpoint, there are several factors that should explicitly support the performance of Emerging Markets:
- Inflation is falling and interest rates are peaking following early and effective monetary policy tightening by Emerging Markets central banks, well ahead of the Fed and other developed world policymakers.
- China has a renewed focus on delivering economic growth and consequently is providing significant monetary and fiscal stimulus to its economy, which will have both a domestic impact but also a broader positive effect on trade. Policy choices must also recognise the need to navigate the headwinds of lower consumer confidence and demand following the reopening of its economy.
- After a prolonged bull run, the US dollar appears to have peaked in late 2022. Objectively, it is still overvalued, partially as a result of significant flows into the US equity market that is also vulnerable to a correction given its high valuation and the potential for a recession in a lagged response to tighter financial conditions.
With this backdrop, the near-term outlook for the main Emerging Markets asset classes is positive.
Given the historical strong correlation, equities should benefit from an expansion of the relative economic growth rate, and a weaker US dollar will support returns from this asset class for many developed world investors. Similarly, local currency bond returns will be underpinned by the monetary easing cycle in many countries together with dollar weakness.
IG sovereign and corporate markets offer meaningful yield enhancement compared with the developed world, and provide a lower-risk alternative for investors that remain concerned about aspects of the global macro environment. At the HY end of the market, distressed credits offer potentially significant recovery upside as the economic cycle turns.
Given the global macro challenges of the past few years, and the ongoing war in Europe and geopolitical tension in Asia, there is understandably an element of risk aversion among some investors, particularly those in the US. However, a broader set of investors increasingly recognises the opportunities represented by the superior growth prospects and attractive yields available across Emerging Markets. As has been seen in previous cycles, an increase in capital flows and investment supports economic growth in the developing world and can therefore lead to further asset class outperformance.
Business review
Successfully managing a cycle
Adjusted EBITDA margin of 54% reflects opening AuM below last year's average level, mitigated by effective cost management. With higher interest income and seed capital returns, diluted EPS is 12.2 pence, 4% lower YoY, and the balance sheet remains robust with £705 million of capital resources including more than £450 million of cash.
| | | Reconciling items: | | | |
| £m | FY2023 Reported | Seed capital (gains)/losses | FX translation (gains)/losses | FY2023 Adjusted | FY2022 Adjusted |
| Net management fees | 183.2 | - | - | 183.2 | 243.5 |
| Performance fees | 5.1 | - | - | 5.1 | 4.5 |
| Other revenue | 2.7 | - | - | 2.7 | 2.9 |
| Foreign exchange | 5.4 | - | (1.0) | 4.4 | 6.3 |
| Net revenue | 196.4 | - | (1.0) | 195.4 | 257.2 |
| Gains on investment securities | (44.3) | 44.3 | - | - | - |
| Change in third-party interests in consolidated funds | 19.3 | (19.3) | - | - | - |
| Personnel expenses | (66.2) | - | 0.3 | (65.9) | (72.3) |
| Other expenses excluding depreciation and amortisation | (24.6) | 1.3 | - | (23.3) | (20.6) |
| EBITDA | 80.6 | 26.3 | (0.7) | 106.2 | 164.3 |
| EBITDA margin | 41% | - | - | 54% | 64% |
| Depreciation and amortisation | (3.2) | - | - | (3.2) | (3.1) |
| Operating profit | 77.4 | 26.3 | (0.7) | 103.0 | 161.2 |
| Net finance income/(expense) | 33.9 | (18.0) | - | 15.9 | 1.6 |
| Associates and joint ventures | 0.5 | - | - | 0.5 | 1.3 |
| Profit before tax | 111.8 | 8.3 | (0.7) | 119.4 | 164.1 |
| Diluted EPS (p) | 12.2 | 0.6 | (0.1) | 12.7 | 18.7 |
Assets under management
AuM declined by 13% over the year to US$55.9 billion, with the movement attributable to net outflows of US$11.5 billion, offset by positive investment performance of US$3.4 billion, delivered in each of the six investment themes. Reflecting the opening AuM level of US$64.0 billion, average AuM was 30% lower than in the prior year at US$58.2 billion (FY2022: US$83.6 billion).
Gross subscriptions of US$7.2 billion represent 11% of opening AuM, lower than in the prior year primarily as a consequence of cautious investor sentiment reflecting concerns over the macroeconomic backdrop in global markets (FY2022: US$13.1 billion, 14% of opening AuM).
Subscriptions were strongest in the external debt, local currency and equities investment themes, particularly as clients recognised that Emerging Markets central banks are ahead of their developed world counterparts in tackling inflation, and the US dollar appears to have peaked in 2022. External debt inflows were a combination of existing client top-ups and continued product development to capture the intrinsic value available in HY markets, and there were new institutional clients in local currency and equities.
Gross redemptions of US$18.7 billion, or 29% of opening AuM, were lower than in the prior year (FY2022: US$26.6 billion, 28% of opening AuM) and include US$2.3 billion of overlay/liquidity redemptions (FY2022: US$6.0 billion), but remain relatively high as a consequence of global macro concerns and market volatility, particularly in the first half of the year, meaning some investors shifted allocations in favour of traditionally perceived safe havens. This risk aversion was particularly evident in developed world investors, reflected in a lower proportion of AuM from clients in the Americas and the fact that Ashmore's Emerging Markets-domiciled clients increased from 27% to 33% of Group AuM.
Consistent with the rally in markets from the September lows, Ashmore's investment performance and net flow momentum improved in the second half of the financial year. Positive investment performance of US$2.6 billion in H2 compares with US$0.8 billion in H1, and net outflows approximately halved from US$7.6 billion in H1 to US$3.9 billion in H2.
The total net outflow for the period of US$11.5 billion (FY2022: US$13.5 billion net outflow) comprises a net outflow from retail clients of US$0.7 billion (24% of opening intermediary retail AuM), reflecting the typically shorter investment horizon, and net redemptions from institutional clients of US$10.8 billion (18% of opening institutional AuM).
Ashmore's local offices continued to perform well and illustrated the benefits of diversification. Total AuM was stable at US$7.0 billion (30 June 2022: US$6.9 billion) with only modest net outflows of US$0.3 billion. As described in the CEO review, these businesses have significant growth potential as they participate in the development of independent domestic asset management industries, and there are opportunities to expand the network over time to enhance the strategic and financial benefits to the Group.
AuM movements by investment theme
The development during the period of AuM by theme is shown in the table below. The local currency investment theme includes US$6.3 billion of overlay/liquidity funds (30 June 2022: US$7.2 billion).
| Investment theme | AuM | Gross | Gross | Net flows | Performance | AuM |
| External debt | 14.4 | 1.7 | (5.7) | (4.0) | 0.6 | 11.0 |
| Local currency | 20.6 | 2.7 | (6.0) | (3.3) | 1.5 | 18.8 |
| Corporate debt | 6.8 | 0.2 | (0.6) | (0.4) | 0.1 | 6.5 |
| Blended debt | 14.4 | 0.7 | (4.0) | (3.3) | 0.8 | 11.9 |
| Fixed income | 56.2 | 5.3 | (16.3) | (11.0) | 3.0 | 48.2 |
| Equities | 6.3 | 1.9 | (2.3) | (0.4) | 0.3 | 6.2 |
| Alternatives | 1.5 | - | (0.1) | (0.1) | 0.1 | 1.5 |
| Total | 64.0 | 7.2 | (18.7) | (11.5) | 3.4 | 55.9 |
The Group's AuM remain geographically diverse and broadly consistent with recent periods, with 37% of AuM invested in Latin America, 29% in Asia Pacific, 13% in Eastern Europe and 21% in the Middle East and Africa.
Clients
Ashmore's clients are predominantly a diversified set of institutions, representing 96% of AuM (30 June 2022: 95%), with the remainder sourced through intermediary retail channels. Segregated accounts represent 81% of AuM (30 June 2022: 81%).
Ashmore's principal mutual fund platforms are in Europe and the US, which in total represent AuM of US$5.7 billion in 43 funds. The European SICAV range comprises 31 funds with AuM of US$4.8 billion (30 June 2022: US$5.4 billion in 30 funds) and the US 40-Act range has 12 funds with AuM of US$0.9 billion (30 June 2022: US$1.0 billion in 12 funds).
Investment performance
As at 30 June 2023, 67% of AuM is outperforming over one year, 69% over three years and 49% over five years (30 June 2022: 45%, 28% and 48%, respectively).
Characteristically, as markets have started to recover from oversold levels, Ashmore's investment processes have delivered meaningful outperformance. In addition to the consistently strong relative performance in local currency, IG and equities strategies, there has been a notable improvement in some of the other, higher yielding fixed income strategies.
Current valuations across the Emerging Markets asset classes underpin additional recovery performance in coming periods, and the inherent value in Ashmore's portfolios support the delivery of further outperformance for clients.
Financial review
Revenues
Opening AuM and average AuM were 23% and 30%, respectively, below the average AuM of the prior year, and this lower level of AuM delivered the 25% fall in net revenue to £196.4 million. On an adjusted basis, excluding FX translation effects, net revenue fell by 24% to £195.4 million.
Net revenue
| | FY2023 | FY2022 |
| Net management fees | 183.2 | 243.5 |
| Performance fees | 5.1 | 4.5 |
| Other revenue | 2.7 | 2.9 |
| FX: hedges | 4.4 | 6.3 |
| Adjusted net revenue | 195.4 | 257.2 |
| FX: balance sheet translation | 1.0 | 5.3 |
| Net revenue | 196.4 | 262.5 |
Net management fee income declined by 25% to £183.2 million. This reflects the lower average AuM and a net management fee margin of 38bps (FY2022: 39bps), partially offset by the benefit of a lower average GBP:US$ rate in this period. At constant FY2022 exchange rates, net management fee income reduced by 32%.
The slight decline in the net management fee margin YoY reflects the positive effects from investment theme mix and large mandate flows offset by the impact of market performance over the year (stronger performance in lower margin strategies and accounts) and competition and other mix effects.
Performance fees of £5.1 million (FY2022: £4.5 million) were realised in the year, and delivered by a range of funds in the local currency, blended debt and alternatives investment themes. Approximately US$12 billion of the Group's AuM, or 21% of the total, is eligible to earn performance fees at 30 June 2023. The Group continues to expect its diverse sources of net management fee income to generate the majority of its net revenues.
Translation of the Group's non-Sterling assets and liabilities, excluding seed capital, resulted in an unrealised FX gain of £1.0 million (FY2022: £5.3 million gain). The Group's effective hedging programme and the active management of FX exposures during the period meant that realised and unrealised hedging gains of £4.4 million were delivered (FY2022: £6.3 million gain). Therefore, the Group recognised a total FX gain of £5.4 million in revenues (FY2022: £11.6 million gain).
Other revenue of £2.7 million was comparable to the prior year (FY2022: £2.9 million).
The table below summarises the net management fee income, performance fee income and net management fee margin by investment theme.
| Investment theme | Net management fees | Performance fees | Net management fee margin | |||
| FY2023 | FY2022 | FY2023 | FY2022 | FY2023 | FY2022 | |
| External debt | 32.5 | 46.7 | - | 2.0 | 31 | 35 |
| Local currency | 43.0 | 54.9 | 3.3 | 0.8 | 28 | 27 |
| Corporate debt | 16.2 | 26.0 | - | - | 30 | 37 |
| Blended debt | 46.8 | 69.3 | 1.1 | 1.3 | 44 | 46 |
| Fixed income | 138.5 | 196.9 | 4.4 | 4.1 | 33 | 35 |
| Equities | 29.5 | 33.1 | - | 0.4 | 58 | 58 |
| Alternatives | 15.2 | 13.5 | 0.7 | - | 144 | 138 |
| Total | 183.2 | 243.5 | 5.1 | 4.5 | 38 | 39 |
Operating costs
Total operating costs of £94.0 million (FY2022: £98.5 million) include £1.3 million of expenses incurred by seeded funds that are required to be consolidated (FY2022: £1.4 million), as disclosed in note 20. On an adjusted basis, taking into account the impact of seed capital and the proportion of the accrual for variable compensation that relates to FX translation gains, operating costs were reduced by 4% compared with the prior year. Adjusted operating costs fell by 7% at constant FY2022 exchange rates.
| | FY2023 | FY2022 |
| Staff costs | (31.4) | (27.8) |
| Other operating costs | (23.3) | (20.6) |
| Depreciation and amortisation | (3.2) | (3.1) |
| Operating costs before VC | (57.9) | (51.5) |
| Variable compensation (VC) | (34.8) | (45.6) |
| VC accrual on FX gains/losses | 0.3 | 1.1 |
| Adjusted operating costs | (92.4) | (96.0) |
| Consolidated funds costs | (1.3) | (1.4) |
| Add back VC on FX gains/losses | (0.3) | (1.1) |
| Total operating costs | (94.0) | (98.5) |
Staff costs increased by 13% to £31.4 million, of which nearly half was due to the lower average GBP:US$ rate. There was also the impact of wage inflation in certain locations and a 1% higher average headcount. The underlying increase in staff costs was primarily in the first half of the year, with costs in the second half being broadly flat on the first half.
Other operating costs, excluding consolidated fund expenses and depreciation and amortisation, increased by 13% to £23.3 million. FX movements account for approximately half of the increase and the remainder was due to the full year impact of returning towards more normal levels of business travel and office occupancy.
Ashmore accrued charitable donations of £0.5 million (FY2022: £0.6 million), equivalent to 0.5% of profit before tax.
Variable compensation has been accrued at 25% of EBVCIT, resulting in a charge of £34.8 million. The higher proportion of profits reflects the point in the cycle, where Ashmore is delivering investment outperformance for clients as markets recover, but the financial performance lags with the impact of lower average AuM levels. In absolute terms, the charge is 24% lower than in the prior year (FY2022: £45.6 million) and consistent with the fall in adjusted net revenue.
The combined depreciation and amortisation charges for the period of £3.2 million were similar to the prior year.
Adjusted EBITDA
The impact of the lower revenue base, partially mitigated by lower operating costs, means that adjusted EBITDA declined by 35% from £164.3 million to £106.2 million. This delivered an adjusted EBITDA margin of 54% for the year (FY2022: 64%).
Finance income
Net finance income of £33.9 million (FY2022: £2.1 million finance expense) includes gains relating to seed capital investments, which are described in more detail below. Excluding such items, net interest income for the period of £15.9 million increased compared with the prior year (FY2022: £1.6 million) due to the benefit of higher market interest rates on the Group's cash deposits.
Seed capital
The following table summarises the principal IFRS items in the accounts to assist in understanding the financial impact of the Group's seed capital programme on profits. The seed capital investments generated realised gains of £2.4 million and an unrealised mark-to-market loss of £10.7 million, to give an aggregate loss of £8.3 million for the year (FY2022: £49.9 million loss). This comprises a £15.3 million loss in respect of consolidated funds (FY2022: £40.5 million loss) and a £7.0 million gain in respect of unconsolidated funds (FY2022: £9.4 million loss).
Impact of seed capital investments on profits
| | FY2023 | FY2022 |
| Consolidated funds (note 20): | | |
| Gains/(losses) on investment securities | (44.3) | (61.3) |
| Change in third-party interests in consolidated funds | 19.3 | 16.5 |
| Operating costs | (1.3) | (1.4) |
| Investment income | 11.0 | 5.7 |
| Sub-total: consolidated funds | (15.3) | (40.5) |
| | | |
| Unconsolidated funds (note 8): | | |
| Market return | 5.7 | (10.6) |
| FX | 1.3 | 1.2 |
| Sub-total: unconsolidated funds | 7.0 | (9.4) |
| | | |
| Total seed capital profit/(loss) | (8.3) | (49.9) |
| - realised | 2.4 | 0.1 |
| - unrealised | (10.7) | (50.0) |
Profit before tax
Statutory profit before tax was 6% lower at £111.8 million (FY2022: £118.4 million) as a consequence of the decline in adjusted EBITDA mitigated by lower losses on seed capital investments and the benefit of higher interest rates on finance income.
Taxation
The effective tax rate of 22.6% (FY2022: 22.4%) is slightly higher than the blended UK corporation tax rate of 20.5% for the year (FY2022: 19.0%) due to the geographic mix of the Group's profits in the period, the valuation of deferred tax assets relating to share-based remuneration and the impact of seed capital gains and losses. Note 12 to the financial statements provides a full reconciliation of this difference compared with the UK corporation tax rate.
The Group's current effective tax rate, based on its geographic mix of profits and prevailing tax rates, is approximately 19% to 20%.
Earnings per share
Basic EPS for the period fell by 7% to 12.4 pence (FY2022: 13.4 pence) and diluted EPS declined by 4% from 12.6 pence to 12.2 pence.
On an adjusted basis, excluding the effects of FX translation, seed capital-related items and relevant tax, diluted EPS was 32% lower at 12.7 pence (FY2022: 18.7 pence).
Balance sheet
Ashmore's consistent approach is to maintain a strong and liquid balance sheet over market cycles, enabling it to support the commercial demands of current and prospective investors, and to take advantage of strategic development opportunities.
As at 30 June 2023, total equity attributable to shareholders of the parent was £898.8 million (30 June 2022: £945.0 million). The Group has no debt.
The level of capital required to support the Group's activities, including its regulatory requirements, is £80.6 million. As at 30 June 2023, the Group had total capital resources of £704.8 million, equivalent to 99 pence per share, and therefore representing an excess of £624.2 million over the Board's level of required capital.
Cash
Ashmore's business model delivers a high conversion rate of operating profits to cash. Based on operating profit of £77.4 million for the period (FY2022: £119.2 million), the Group generated £111.6 million of cash from operations (FY2022: £182.1 million). The operating cash flows after excluding consolidated funds represent 105% of adjusted EBITDA (FY2022: 113%).
Cash and cash equivalents by currency
| | 30 June | 30 June |
| Sterling | 374.0 | 273.1 |
| US dollar | 71.1 | 247.9 |
| Other | 33.5 | 31.0 |
| Total | 478.6 | 552.0 |
Excluding cash held in consolidated funds, the Group's cash and cash equivalents reduced by £73.7 million to £468.3 million (30 June 2022: £542.0 million), principally due to new seed capital investments. There was an increase in the proportion of cash held in Sterling following the sale of US dollars for Sterling at attractive levels in the first half of the year.
Seed capital investments
The Group's seed capital programme has delivered growth in third-party AuM with approximately US$6 billion of AuM in funds that have been seeded, representing 11% of total Group AuM.
During the year, the Group made new investments of £63.9 million and profitably realised £24.6 million from previous investments. The unrealised mark-to-market loss on the portfolio was £19.8 million, meaning that the market value of the Group's seed capital investments increased to £291.5 million (30 June 2022: £272.0 million).
Subscriptions in the period were focused on developing new funds in the external debt, local currency and equities themes, including providing access to the Group's local asset management capabilities.
The ability to redeem seed capital was facilitated by successful realisations by funds in the alternatives theme, particularly in respect of infrastructure-related investments in Latin America, and matching client flows into equity funds managed locally in Saudi Arabia.
The mark-to-market reduction in value was due to changes in asset valuations in alternatives funds, predominantly in the first half of the year, with positive returns delivered by funds in the fixed income and equities themes.
The diversified mix of seed capital investments means that the underlying fund portfolios, some of which are consolidated under IFRS 10, have exposure to a range of Emerging Markets asset classes, including sovereign and corporate fixed income, listed equities, private equity, real estate and infrastructure, and a wide array of industries including education, energy, financials, healthcare, industrials, basic materials, transport and utilities.
Ashmore has integrated the consideration of ESG factors into its investment processes, which therefore means the Group's seed capital investments are in funds that are scored in accordance with Ashmore's proprietary ESG methodology and may contribute to Ashmore's involvement in industry initiatives such as Climate Action 100+, NZAMI and UN PRI.
Seed capital market value by currency
| | 30 June | 30 June |
| US dollar | 240.1 | 222.4 |
| Colombian peso | 19.7 | 19.0 |
| Other | 31.7 | 30.6 |
| Total market value | 291.5 | 272.0 |
As at 30 June 2023, two-thirds of the Group's seed capital is held in funds with at least monthly dealing frequency, such as SICAV or US 40-Act mutual funds. Ashmore has also made seed capital commitments to funds of £8.9 million that were undrawn at the period end, giving a total value for the Group's seed capital programme of approximately £300 million.
Goodwill and intangible assets
At 30 June 2023, goodwill and intangible assets on the Group's balance sheet totalled £86.9 million (30 June 2022: £90.9 million). The movement in the period is primarily the result of an FX revaluation loss in reserves of £3.9 million (FY2022: £10.5 million gain).
Shares held by EBT
The EBT purchased £15.6 million of ordinary shares during the period in anticipation of the vesting of employee share awards. Consequently, at 30 June 2023, the EBT owned 50,834,683 ordinary shares (30 June 2022: 55,512,301 ordinary shares), representing 7.1% of the Group's issued share capital (30 June 2022: 7.8%).
Foreign exchange
The majority of the Group's fee income is received in US dollars and it is the Group's policy to hedge up to two-thirds of the notional value of budgeted foreign currency-denominated net management fees. Foreign currency assets and liabilities, including cash, are marked to market at the period end exchange rate with movements reported in either revenues or OCI.
Movements in the GBP:US$ and other exchange rates over the period increased net management fees by 7%, increased operating costs by 3%, and resulted in a translation gain in net revenue of £1.0 million on the Group's foreign currency assets and liabilities and a £1.3 million mark-to-market gain on the Group's seed capital investments.
Included in OCI is an unrealised FX translation loss on non-Sterling assets and liabilities of £26.2 million (FY2022: £80.2 million gain), which, in addition to the goodwill movement described above, mainly comprises £11.5 million on the value of seed capital investments and £7.6 million on the Group's cash balances.
Dividend
The Board's policy is to pay a progressive ordinary dividend over time, taking into consideration factors such as the prospects for the Group's earnings, demands on the Group's financial resources, and the markets in which the Group operates.
The Board recognises the importance of the ordinary dividend to shareholders and, taking into consideration the profit for the year, the substantial cash flows delivered, the strength of the balance sheet, the positive near-term outlook as described in the CEO review and the substantial medium-term growth opportunities available to Ashmore, it has recommended a final dividend of 12.1 pence per share.
If approved by shareholders, the dividend will be paid on 8 December 2023 to all shareholders on the register on 3 November 2023.
Tom Shippey
Group Finance Director
5 September 2023
RISK MANAGEMENT
In accordance with the Code, the Board is ultimately responsible for the Group's risk management and internal control systems and for reviewing their effectiveness. Such systems and their review are designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.
Principal and emerging risks, controls and mitigants
The table below summarises those principal risks that the Group has assessed as being most significant currently, together with examples of associated controls and mitigants. Reputational and conduct risks are common to most aspects of Ashmore's strategy and business model.
Ashmore's internal control framework considers the assessment and management of emerging risks alongside its principal risks, current examples of which are:
- the impact of inflation;
- geopolitical and sanctions risks; and
- ESG risks including regulatory and industry focus on potential greenwashing, legal uncertainty and litigation risks arising from the industry's differing interpretation of ESG regulation, and the impact of ESG factors on investors' decisions to invest in Emerging Markets.
Principal risks and associated controls and mitigants
| Description of principal risks | | Examples of associated controls and mitigants |
| Strategic and business risks (Responsibility: Board of Directors) | ||
| Long-term downturn in Emerging Markets fundamentals/technicals/sentiment, and impact of broader industry changes (including ESG) on Ashmore's strategy and business model | | - Group strategy is reviewed and approved by a Board with relevant industry experience - Diversification of investment capabilities and products - Ashmore has a strong balance sheet with no debt - ESG and specialised committees meet regularly - The Board reviews diversity data on an annual basis |
| Market capacity issues and increased competition constrain growth | | - Experienced Emerging Markets investment professionals with deep market knowledge - Periodic investment theme capacity reviews - Emerging Markets asset classes continue to grow, increasing the size of Ashmore's investable universe |
| Failure to understand and plan for the potential impact of investor sentiment, climate change and sustainability regulations on product preferences and underlying asset prices (including effects of transition to a low-carbon economy) | | - Oversight by ESGC, which covers corporate and investment activities, and scoring of all issuers for E, S and G factors - Head of Responsible Investment and ESG Policy provides updates to the Board - NZAMI membership and participation in industry working groups to prepare for net zero commitments |
| Client risks (Responsibility: Product Committee and RCC) | ||
| Inappropriate marketing or ESG strategy and/or ineffective management of existing and potential fund investors and distributors, including impact of net outflows and fee margin pressure | | - Regular Product Committee meetings review product suitability and appropriateness - Experienced distribution team with appropriate geographic coverage - Investor education to ensure understanding of Ashmore investment themes and products - ESGC includes distribution team members |
| Inadequate client oversight including alignment of interests | | - Global distribution team appropriately structured for institutional and intermediary retail clients - Monitoring of client-related issues including a formal complaints handling process - Compliance and legal oversight to ensure clear and fair terms of business and disclosures, and appropriate client communications and financial promotions |
| Treasury risks (Responsibility: CEO and GFD) | ||
| Inaccurate financial projections and hedging of future cash flows and balance sheet | | - Defined risk appetite, and risk appetite measures updated quarterly - Group FX hedging policy and FX and Liquidity Management Committee |
| Investment risks (Responsibility: Group ICs) | ||
| Downturn in long-term performance | | - Consistent investment philosophy over nearly 30 years and numerous market cycles, with dedicated Emerging Markets focus including country visits and network of local offices |
| Operational risks (Responsibility: RCC) | | |
| Inadequate security of information including cyber security and data protection | | - Information security and data protection policies, subject to annual review including cyber security review - Cyber Security Working Group meets quarterly - Employees receive online training |
| Failure of IT infrastructure, including inability to support business growth | | - Appropriate IT policies with annual review cycle - IT systems and environmental monitoring - Group IT platform incorporates local offices |
| Legal action, fraud or breach of contract perpetrated against the Group, its funds or investments | | - Independent Internal Audit function that considers risk of fraud in each audit - Anti-money laundering and anti-bribery and corruption policies, also required for service providers - Whistleblowing policy including independent reporting line and Board sponsor - Due diligence on all new, and regular reviews of existing, service providers - Insurance policies in place with appropriate cover |
| Insufficient resources, including loss of key employees, inability to attract employees, and impact of remote working, which hampers growth or the Group's ability to execute its strategy | | - Committee-based investment management reduces key man risk - Appropriate Remuneration policy with emphasis on performance-related pay and long-dated deferral of equity awards - Regular reviews of resource requirements and updates provided to the Board - Annual review of remuneration and benefits including benchmarking against industry - Annual Culture and Conduct report to the Board |
| Lack of understanding and compliance with global and local regulatory requirements, as well as conflicts of interest and not treating customers fairly, and financial crime, which includes money laundering, bribery and corruption, leading to high level publicity or regulatory sanction | | - Regulatory Development Steering Group and compliance monitoring programme, which covers financial crime risks such as money laundering and bribery - Compliance policies covering global and local offices, for example global conflicts of interest and inducements policies - Anti-money laundering and anti-bribery and corruption policies - Conduct risk and organisational culture indicators are considered - ESGC has oversight of regulatory and reporting requirements - Compliance function manages sanctions restrictions |
| Inadequate oversight of Ashmore overseas offices | | - GFD has oversight responsibility for overseas offices, and RCC has oversight of the operating model with annual reviews. Senior employees take local board/advisory positions - Dual reporting lines into local management and Group department heads, with adherence to Group policies - Local risk and compliance committees held and RCC receives updates - Internal Audit reviews, and annual governance reviews reported to RCC |
| Inappropriate oversight of market, liquidity, credit, counterparty and operational risks | | - Group risk management policies, reviewed regularly - Monthly reviews of market and liquidity risk - Quarterly reviews of principal risks, counterparties and credit risk |
Consolidated statement of comprehensive income
For the year ended 30 June 2023
| | Notes | 2023 | 2022 |
| Management fees | | 185.4 | 247.0 |
| Performance fees | | 5.1 | 4.5 |
| Other revenue | | 2.7 | 2.9 |
| Total revenue | | 193.2 | 254.4 |
| Distribution costs | | (2.2) | (3.5) |
| Foreign exchange | 7 | 5.4 | 11.6 |
| Net revenue | | 196.4 | 262.5 |
| | | | |
| Losses on investment securities | 20 | (44.3) | (61.3) |
| Change in third-party interests in consolidated funds | 20 | 19.3 | 16.5 |
| Personnel expenses | 9 | (66.2) | (73.4) |
| Other expenses | 11 | (27.8) | (25.1) |
| Operating profit | | 77.4 | 119.2 |
| | | | |
| Finance income/(expense) | 8 | 33.9 | (2.1) |
| Share of profit from associates | 26 | 0.5 | 1.3 |
| Profit before tax | | 111.8 | 118.4 |
| | | | |
| Tax expense | 12 | (25.3) | (26.5) |
| Profit for the year | | 86.5 | 91.9 |
| | | | |
| Other comprehensive income/(loss), net of related tax effect | | | |
| Items that may be reclassified subsequently to profit or loss: | | | |
| Foreign currency translation differences arising on foreign operations | | (26.2) | 80.2 |
| Cash flow hedge intrinsic value gains/(losses) | | 4.9 | (6.0) |
| Other comprehensive income/(loss), net of tax | | (21.3) | 74.2 |
| Total comprehensive income for the year | | 65.2 | 166.1 |
| | | | |
| Profit attributable to: | | | |
| Equity holders of the parent | | 83.3 | 88.5 |
| Non-controlling interests | | 3.2 | 3.4 |
| Profit for the year | | 86.5 | 91.9 |
| | | | |
| Total comprehensive income attributable to: | | | |
| Equity holders of the parent | | 62.7 | 161.9 |
| Non-controlling interests | | 2.5 | 4.2 |
| Total comprehensive income for the year | | 65.2 | 166.1 |
| | | | |
| Earnings per share | | | |
| Basic | 13 | 12.43p | 13.42p |
| Diluted | 13 | 12.15p | 12.61p |
Consolidated balance sheet
As at 30 June 2023
| | Notes | 2023 | 2022 |
| Assets | | | |
| Non-current assets | | | |
| Goodwill and intangible assets | 15 | 86.9 | 90.9 |
| Property, plant and equipment | 16 | 6.5 | 9.1 |
| Investment in associates | 26 | 2.3 | 2.1 |
| Non-current financial assets measured at fair value | 19, 20 | 54.1 | 39.3 |
| Deferred acquisition costs | | 0.3 | 0.4 |
| Deferred tax assets | 18 | 23.9 | 32.7 |
| | | 174.0 | 174.5 |
| Current assets | | | |
| Investment securities | 19, 20 | 229.9 | 265.1 |
| Financial assets measured at fair value | 19, 20 | 55.8 | 32.3 |
| Trade and other receivables | 17 | 70.4 | 74.3 |
| Cash and cash equivalents | | 478.6 | 552.0 |
| | | 834.7 | 923.7 |
| | | | |
| Total assets | | 1,008.7 | 1,098.2 |
| | | | |
| Equity and liabilities | | | |
| Capital and reserves - attributable to equity holders of the parent | | | |
| Issued capital | 22 | 0.1 | 0.1 |
| Share premium | | 15.6 | 15.6 |
| Retained earnings | | 875.4 | 901.0 |
| Foreign exchange reserve | | 7.7 | 33.2 |
| Cash flow hedging reserve | | - | (4.9) |
| | | 898.8 | 945.0 |
| Non-controlling interests | 31 | 14.2 | 21.8 |
| Total equity | | 913.0 | 966.8 |
| Liabilities | | | |
| Non-current liabilities | | | |
| Lease liabilities | 16 | 3.7 | 5.8 |
| Deferred tax liabilities | 18 | 9.3 | 8.8 |
| | | 13.0 | 14.6 |
| Current liabilities | | | |
| Lease liabilities | 16 | 2.1 | 2.2 |
| Derivative financial instruments | 19, 21 | 0.2 | 5.2 |
| Third-party interests in consolidated funds | 19, 20 | 56.2 | 73.0 |
| Trade and other payables | 24 | 24.2 | 36.4 |
| | | 82.7 | 116.8 |
| | | | |
| Total liabilities | | 95.7 | 131.4 |
| Total equity and liabilities | | 1,008.7 | 1,098.2 |
Approved by the Board on 5 September 2023 and signed on its behalf by:
| Mark Coombs | Tom Shippey |
| Chief Executive Officer | Group Finance Director |
Consolidated statement of changes in equity
For the year ended 30 June 2023
| | Attributable to equity holders of the parent | | | |||||
| | Issued capital £m | Share premium | Retained earnings | Foreign exchange reserve | Cash flow hedging reserve | Total | Non-controlling interests | Total |
| Balance at 30 June 2021 | 0.1 | 15.6 | 941.0 | (46.2) | 1.1 | 911.6 | 21.1 | 932.7 |
| | | | | | | | | |
| Profit for the year | - | - | 88.5 | - | - | 88.5 | 3.4 | 91.9 |
| Other comprehensive income/(loss): | | | | | | | | |
| Foreign currency translation differences arising on foreign operations | - | - | - | 79.4 | - | 79.4 | 0.8 | 80.2 |
| Cash flow hedge intrinsic value losses | - | - | - | - | (6.0) | (6.0) | - | (6.0) |
| Total comprehensive income/(loss) | - | - | 88.5 | 79.4 | (6.0) | 161.9 | 4.2 | 166.1 |
| Transactions with owners: | | | | | | | | |
| Purchase of own shares | - | - | (34.5) | - | - | (34.5) | - | (34.5) |
| Share-based payments | - | - | 24.5 | - | - | 24.5 | - | 24.5 |
| Decrease in non-controlling interests | - | - | - | - | - | - | (0.5) | (0.5) |
| Dividends to equity holders | - | - | (118.5) | - | - | (118.5) | - | (118.5) |
| Dividends to non-controlling interests | - | - | - | - | - | - | (3.0) | (3.0) |
| Total contributions and distributions | - | - | (128.5) | - | - | (128.5) | (3.5) | (132.0) |
| Balance at 30 June 2022 | 0.1 | 15.6 | 901.0 | 33.2 | (4.9) | 945.0 | 21.8 | 966.8 |
| | | | | | | | | |
| Profit for the year | - | - | 83.3 | - | - | 83.3 | 3.2 | 86.5 |
| Other comprehensive income/(loss): | | | | | | | | |
| Foreign currency translation differences arising on foreign operations | - | - | - | (25.5) | - | (25.5) | (0.7) | (26.2) |
| Cash flow hedge intrinsic value gains | - | - | - | - | 4.9 | 4.9 | - | 4.9 |
| Total comprehensive income/(loss) | - | - | 83.3 | (25.5) | 4.9 | 62.7 | 2.5 | 65.2 |
| Transactions with owners: | | | | | | | | |
| Purchase of own shares | - | - | (15.6) | - | - | (15.6) | - | (15.6) |
| Share-based payments | - | - | 18.5 | - | - | 18.5 | - | 18.5 |
| Movements in non-controlling interests | - | - | 6.6 | - | - | 6.6 | (6.8) | (0.2) |
| Dividends to equity holders | - | - | (118.4) | - | - | (118.4) | - | (118.4) |
| Dividends to non-controlling interests | - | - | - | - | - | - | (3.3) | (3.3) |
| Total contributions and distributions | - | - | (108.9) | - | - | (108.9) | (10.1) | (119.0) |
| Balance at 30 June 2023 | 0.1 | 15.6 | 875.4 | 7.7 | - | 898.8 | 14.2 | 913.0 |
Consolidated cash flow statement
For the year ended 30 June 2023
| | 2023 | 2022 |
| Operating activities | | |
| Profit for the year | 86.5 | 91.9 |
| Adjustments for non-cash items: | | |
| Depreciation and amortisation | 3.2 | 3.1 |
| Share-based payments | 18.9 | 24.3 |
| Foreign exchange gains | (5.4) | (11.6) |
| Net losses on investment securities | 25.0 | 44.8 |
| Finance (income)/expense | (33.9) | 2.1 |
| Tax expense | 25.3 | 26.5 |
| Share of profits from associates | (0.5) | (1.3) |
| Cash generated from operations before working capital changes | 119.1 | 179.8 |
| Changes in working capital: | | |
| Decrease in trade and other receivables | 9.7 | 4.9 |
| Decrease/(increase) in derivative financial instruments | (5.0) | 6.5 |
| Decrease in trade and other payables | (12.2) | (9.1) |
| Cash generated from operations | 111.6 | 182.1 |
| Taxes paid | (7.1) | (24.7) |
| Net cash generated from operating activities | 104.5 | 157.4 |
| | | |
| Investing activities | | |
| Interest and investment income received | 31.2 | 8.1 |
| Purchase of non-current financial assets measured at fair value | (19.5) | (1.9) |
| Purchase of financial assets measured at fair value | (23.0) | (5.5) |
| Sale of investment securities | 3.2 | 24.2 |
| Sale of non-current financial assets measured at fair value | 5.0 | 1.5 |
| Sale of financial assets held for sale | - | 0.1 |
| Sale of financial assets measured at fair value | - | 44.0 |
| Net cash on initial consolidation of seed capital investments | (1.7) | 0.3 |
| Purchase of property, plant and equipment | (0.4) | (0.5) |
| Net cash generated from/(used in) investing activities | (5.2) | 70.3 |
| | | |
| Financing activities | | |
| Dividends paid to equity holders | (118.4) | (118.5) |
| Dividends paid to non-controlling interests | (3.3) | (3.0) |
| Third-party subscriptions into consolidated funds | 2.8 | 0.5 |
| Third-party redemptions from consolidated funds | (29.1) | (4.2) |
| Distributions paid by consolidated funds | (4.2) | (10.7) |
| Decrease in non-controlling interests | (0.4) | (0.5) |
| Payment of lease liabilities | (2.2) | (2.0) |
| Interest paid | (0.3) | (0.4) |
| Purchase of own shares | (15.6) | (34.5) |
| Net cash used in financing activities | (170.7) | (173.3) |
| | | |
| Net increase/(decrease) in cash and cash equivalents | (71.4) | 54.4 |
| Cash and cash equivalents at beginning of year | 552.0 | 456.1 |
| Effect of exchange rate changes on cash and cash equivalents | (2.0) | 41.5 |
| Cash and cash equivalents at end of year | 478.6 | 552.0 |
| | | |
| Cash and cash equivalents at end of year comprise: | | |
| Cash at bank and in hand | 40.9 | 57.4 |
| Daily dealing liquidity funds | 56.8 | 225.7 |
| Deposits | 380.9 | 268.9 |
| | 478.6 | 552.0 |
Company balance sheet
As at 30 June 2023
| | Notes | 2023 | 2022 |
| Assets | | | |
| Non-current assets | | | |
| Goodwill | 15 | 4.1 | 4.1 |
| Property, plant and equipment | 16 | 4.1 | 5.5 |
| Investment in subsidiaries | 25 | 19.9 | 19.9 |
| Deferred acquisition costs | | 0.3 | 0.4 |
| Trade and other receivables | 17 | 167.8 | 132.0 |
| Deferred tax assets | 18 | 11.6 | 18.2 |
| | | 207.8 | 180.1 |
| Current assets | | | |
| Trade and other receivables | 17 | 116.6 | 324.9 |
| Derivative financial instruments | 21 | 0.2 | - |
| Cash and cash equivalents | | 327.7 | 159.7 |
| | | 444.5 | 484.6 |
| Total assets | | 652.3 | 664.7 |
| | | | |
| Equity and liabilities | | | |
| Capital and reserves | | | |
| Issued capital | 22 | 0.1 | 0.1 |
| Share premium | | 15.6 | 15.6 |
| Retained earnings | | 605.2 | 600.6 |
| Cash flow hedging reserve | | - | (4.9) |
| Total equity attributable to equity holders of the Company | | 620.9 | 611.4 |
| | | | |
| Liabilities | | | |
| Non-current liabilities | | | |
| Lease liability | 16 | 2.2 | 3.3 |
| | | | |
| Current liabilities | | | |
| Lease liability | 16 | 1.2 | 1.3 |
| Derivative financial instruments | 21 | - | 5.2 |
| Trade and other payables | 24 | 28.0 | 43.5 |
| | | 29.2 | 50.0 |
| Total liabilities | | 31.4 | 53.3 |
| Total equity and liabilities | | 652.3 | 664.7 |
The Company has taken the exemption under section 408 of the Companies Act 2006 not to present its profit and loss account and related notes. The Company's profit for the year ended 30 June 2023 was £120.1 million (30 June 2022: £188.6 million).
The financial statements of Ashmore Group plc (registered number 03675683) were approved by the Board on 5 September 2023 and signed on its behalf by:
| Mark Coombs | Tom Shippey |
| Chief Executive Officer | Group Finance Director |
Company statement of changes in equity
For the year ended 30 June 2023
| | Issued | Share | Retained earnings | Cash flow hedging | Total equity attributable to equity holders of the parent |
| Balance at 30 June 2021 | 0.1 | 15.6 | 540.6 | 1.1 | 557.4 |
| | | | | | |
| Profit for the year | - | - | 188.6 | - | 188.6 |
| Cash flow hedge intrinsic value losses | - | - | - | (6.0) | (6.0) |
| Purchase of own shares | - | - | (34.1) | - | (34.1) |
| Share-based payments | - | - | 24.0 | - | 24.0 |
| Dividends to equity holders | - | - | (118.5) | - | (118.5) |
| Balance at 30 June 2022 | 0.1 | 15.6 | 600.6 | (4.9) | 611.4 |
| | | | | | |
| Profit for the year | - | - | 120.1 | - | 120.1 |
| Cash flow hedge intrinsic value gains | - | - | - | 4.9 | 4.9 |
| Purchase of own shares | - | - | (15.6) | - | (15.6) |
| Share-based payments | - | - | 18.5 | - | 18.5 |
| Dividends to equity holders | - | - | (118.4) | - | (118.4) |
| Balance at 30 June 2023 | 0.1 | 15.6 | 605.2 | - | 620.9 |
Company cash flow statement
For the year ended 30 June 2023
| | 2023 | 2022 |
| Operating activities | | |
| Profit for the year | 120.1 | 188.6 |
| Adjustments for: | | |
| Depreciation and amortisation | 1.8 | 1.8 |
| Share-based payments | 13.7 | 19.3 |
| Foreign exchange losses/(gains) | 9.6 | (58.4) |
| Finance income | (10.0) | (0.4) |
| Tax expense | 9.8 | 26.0 |
| Dividends received from subsidiaries | (145.2) | (174.0) |
| Cash generated from/(used in) operations before working capital changes | (0.2) | 2.9 |
| Changes in working capital: | | |
| Decrease/(increase) in trade and other receivables | 57.8 | (73.8) |
| Decrease/(increase) in derivative financial instruments | (5.4) | 6.5 |
| Decrease in trade and other payables | (15.5) | (59.0) |
| Cash generated from/(used in) operations | 36.7 | (123.4) |
| Taxes paid | (6.3) | (12.1) |
| Net cash generated from/(used in) operating activities | 30.4 | (135.5) |
| | | |
| Investing activities | | |
| Interest received | 8.9 | 0.2 |
| Loans advanced to subsidiaries | (27.3) | (0.2) |
| Loans repaid by subsidiaries | 137.8 | 184.0 |
| Dividends received from subsidiaries | 145.2 | 174.0 |
| Purchase of property, plant and equipment | (0.3) | (0.4) |
| Net cash generated from investing activities | 264.3 | 357.6 |
| | | |
| Financing activities | | |
| Dividends paid | (118.4) | (118.5) |
| Payment of lease liability | (1.2) | (1.1) |
| Interest paid | (0.1) | (0.2) |
| Purchase of own shares | (15.6) | (34.1) |
| Net cash used in financing activities | (135.3) | (153.9) |
| | | |
| Net increase in cash and cash equivalents | 159.4 | 68.2 |
| Cash and cash equivalents at beginning of year | 159.7 | 86.1 |
| Effect of exchange rate changes on cash and cash equivalents | 8.6 | 5.4 |
| Cash and cash equivalents at end of year | 327.7 | 159.7 |
| | | |
| Cash and cash equivalents at end of year comprise: | | |
| Cash at bank and in hand | 2.9 | 6.3 |
| Daily dealing liquidity funds | 0.8 | 1.9 |
| Deposits | 324.0 | 151.5 |
| | 327.7 | 159.7 |
Notes to the financial statements
1) General information
Ashmore Group plc (the Company) is a public limited company listed on the London Stock Exchange and incorporated and domiciled in the United Kingdom. The consolidated financial statements of the Company and its subsidiaries (together the Group) for the year ended 30 June 2023 were authorised for issue by the Board of Directors on 5 September 2023. The principal activity of the Group is described in the Directors' report.
2) Basis of preparation
The Group and Company financial statements for the year ended 30 June 2023 have been prepared in accordance with UK-adopted international accounting standards.
The financial statements have been prepared on a going concern basis under the historical cost convention, except for the measurement at fair value of derivative financial instruments and financial assets and liabilities that are held at fair value through profit or loss.
The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 that allows it not to present its individual statement of comprehensive income and related notes.
Going concern
The Board of Directors has considered the resilience of the Group, taking into account its current financial position, and the principal and emerging risks facing the business in the context of the current economic outlook. The Board reviewed cash flow forecasts for a period of 12 months from the date of approval of these financial statements which indicate that the Group will have sufficient funds to meet its liabilities as they fall due for that period. The Board applied stressed scenarios, including severe but plausible downside assumptions on AuM, profitability of the Group and known commitments. While there are wider market uncertainties that may impact the Group, the stressed scenarios, which assumed a significant reduction in revenue for the entire forecast period, show that the Group and Company would continue to operate profitably and meet their liabilities as they fall due for a period of at least 12 months from the date of approval of the annual financial statements. The financial statements have therefore been prepared on a going concern basis.
Principal estimates and judgements
The preparation of the financial statements in conformity with UK-adopted international accounting standards requires the use of certain accounting estimates, and management to exercise its judgement in the process of applying the Group's accounting policies. The estimates and judgements used in preparing the financial statements are periodically evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
There are areas of the financial statements where the use of estimation is important, but where the risk of material adjustment is not significant, including the assessment of performance conditions attached to certain executive share awards (note 10), assumptions used in the valuation of level 3 seed capital investments (note 19) and deferred tax assets (note 18). The areas where judgements are made include the impairment review of goodwill (note 15), the calculation of lease assets and liabilities (note 16) and consolidation of seed capital investments (note 20).
3) New Standards and Interpretations not yet adopted
There were no Standards or Interpretations that were in issue and required to be adopted by the Group as at the date of authorisation of these consolidated financial statements. No other Standards or Interpretations have been issued that are expected to have a material impact on the Group's financial statements.
4) Significant accounting policies
The following principal accounting policies have been applied consistently where applicable to all years presented in dealing with items considered material in relation to the Group and Company financial statements, unless otherwise stated.
Basis of consolidation
The consolidated financial statements of the Group comprise the financial statements of the Company and its subsidiaries, associates and joint ventures. This includes an Employee Benefit Trust (EBT) established for the employee share-based awards and consolidated investment funds.
Interests in subsidiaries
Subsidiaries are entities, including investment funds, over which the Group has control as defined by IFRS 10. The Group has control if it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date when control ceases. The Group reassesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the elements of control.
The profit or loss and each component of other comprehensive income are attributed to the equity holders of the Company and to any non-controlling interests. Based on their nature, the interests of third parties in consolidated funds are classified as liabilities and appear as 'Third-party interests in consolidated funds' on the Group's balance sheet.
Associates and joint ventures are presented as single-line items in the statement of comprehensive income and balance sheet. Intercompany transactions and balances are eliminated on consolidation. Consistent accounting policies have been applied across the Group in the preparation of the consolidated financial statements as at 30 June 2023.
A change in the ownership interest of a consolidated entity that does not result in a loss of control by the Group is accounted for as an equity transaction. If the Group loses control over a consolidated entity, it derecognises the related assets, goodwill, liabilities, non-controlling interest and other components of equity, and any gain or loss is recognised in consolidated comprehensive income. Any investment retained is recognised at its fair value at the date of loss of control.
Interests in associates and joint arrangements
Associates are partly owned entities over which the Group has significant influence but no control. Joint ventures are entities through which the Group and other parties undertake an economic activity which is subject to joint control.
Investments in associates and interests in joint ventures are measured using the equity method of accounting. Under this method, the investments are initially recognised at cost, including attributable goodwill, and are adjusted thereafter for the post-acquisition changes in the Group's share of net assets. The Group's share of post-acquisition profit or loss is recognised in the statement of comprehensive income. Where the Group's financial year is not coterminous with those of its associates or joint ventures, unaudited interim financial information is used after appropriate adjustments have been made.
Interests in consolidated structured entities
The Group acts as fund manager to investment funds that are considered to be structured entities. Structured entities are entities that have been designed so that voting or similar rights are not the dominant factor in deciding which party has control: for example, when any voting rights relate to administrative tasks only and the relevant activities of the entity are directed by means of contractual arrangements. The Group's assets under management are managed within structured entities. These structured entities typically consist of unitised vehicles such as Société d'Investissement à Capital Variable (SICAVs), limited partnerships, unit trusts and open-ended and closed-ended vehicles which entitle third-party investors to a percentage of the vehicle's net asset value.
The Group has interests in structured entities as a result of the management of assets on behalf of its clients. Where the Group holds a direct interest in a closed-ended fund, private equity fund or open-ended pooled fund such as a SICAV, the interest is accounted for either as a consolidated structured entity or as a financial asset, depending on whether the Group has control over the fund or not. Control is determined in accordance with IFRS 10, based on an assessment of the level of power and aggregate economic interest that the Group has over the fund, relative to third-party investors. Power is normally conveyed to the Group through the existence of an investment management agreement and/or other contractual arrangements. Aggregate economic interest is a measure of the Group's exposure to variable returns in the fund through a combination of direct interest, expected share of performance fees, expected management fees, fair value gains or losses, and distributions receivable from the fund. The Group concludes that it acts as a principal when the power it has over the fund is deemed to be exercised for self-benefit, considering the level of aggregate economic exposure in the fund and the assessed strength of third-party investors' kick-out rights. The Group concludes that it acts as an agent when the power it has over the fund is deemed to be exercised for the benefit of third-party investors.
If the Group concludes that it acts as a principal, it is deemed to have control and, therefore, will consolidate a fund as if it were a subsidiary. If the Group concludes that it does not have control over the fund, the Group recognises and measures its interest in the fund as a financial asset.
Interests in unconsolidated structured entities
The Group classifies the following investment funds as unconsolidated structured entities:
- Segregated mandates and pooled funds managed where the Group does not hold any direct interest. In this case, the Group considers that its aggregate economic exposure is insignificant and, in relation to segregated mandates, the third-party investor has the practical ability to remove the Group from acting as fund manager, without cause. As a result, the Group concludes that it acts as an agent for third-party investors.
- Pooled funds managed by the Group where the Group holds a direct interest, for example seed capital investments, and the Group's aggregate economic exposure in the fund relative to third-party investors is less than the threshold established by the Group for determining agent versus principal classification. As a result, the Group concludes that it is an agent for third-party investors and, therefore, will account for its beneficial interest in the fund as a financial asset.
The disclosure of the AuM in respect to consolidated and unconsolidated structured entities is provided in note 27.
Foreign currency
The Group's financial statements are presented in Pounds Sterling (Sterling), which is also the Company's functional and presentation currency. Items included in the financial statements of each of the Group's entities are measured using the functional currency, which is the currency that prevails in the primary economic environment in which the entity operates.
Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of the Group entities at the spot exchange rates at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency at the spot exchange rate at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on translation are generally recognised in comprehensive income, except for qualifying cash flow hedges to the extent that the hedge is effective, in which case foreign currency differences arising are recognised in other comprehensive income.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated into Sterling at the spot exchange rates at the balance sheet date. The revenues and expenses of foreign operations are translated into Sterling at rates approximating to the foreign exchange rates ruling at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and accumulated in the foreign currency translation reserve, except to the extent that the translation difference is allocated to non-controlling interests.
When a foreign operation is disposed of such that control is lost, the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to comprehensive income as part of the gain or loss on disposal. If the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.
If the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency differences arising on the item form part of the net investment in the foreign operation and are recognised in other comprehensive income, and accumulated in the foreign currency translation reserve within equity.
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
The consideration transferred for the acquisition is generally measured at the acquisition date fair value, as are the identifiable net assets acquired, liabilities incurred (including any asset or liability resulting from a contingent consideration arrangement) and equity instruments issued by the Group in exchange for control of the acquiree.
Acquisition-related costs are expensed as incurred, except if they are related to the issue of debt or equity securities.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. If the contingent consideration is classified as equity, it will not be remeasured and settlement is accounted for within equity.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.
Goodwill
The cost of a business combination in excess of the fair value of net identifiable assets or liabilities acquired, including intangible assets identified, is recognised as goodwill and stated at cost less any accumulated impairment losses. Goodwill has an indefinite useful life, is not subject to amortisation and is tested annually for impairment or when there is an indication of impairment.
Intangible assets
The cost of intangible assets, such as management contracts and brand names, acquired as part of a business combination is their fair value as at the date of acquisition. The fair value at the date of acquisition is calculated using the discounted cash flow methodology and represents the valuation of the profits expected to be earned from the management contracts and brand name in place at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and impairment losses. Intangible assets with finite life are amortised on a systematic basis over their useful lives. The useful life of an intangible asset which has arisen from contractual or other legal rights does not exceed the period of the contractual or other legal rights.
Non-controlling interests (NCI)
The Group recognises NCI in an acquired entity either at fair value or at the NCI's proportionate share of the acquired entity's net identifiable assets. This decision is made on an acquisition-by-acquisition basis. Changes to the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost is determined on the basis of the direct and indirect costs that are directly attributable. Property, plant and equipment are depreciated using the straight-line method over the estimated useful lives, assessed to be five years for office equipment and four years for IT equipment. The residual values and useful lives of assets are reviewed at least annually.
The Group's property, plant and equipment include right-of use assets recognised on lease arrangements in accordance with IFRS 16 Leases.
Leases
The Group's lease arrangements primarily consist of leases relating to office space. Obligations and rights under lease agreements are recognised and classified within property, plant and equipment on the Group's consolidated statement of financial position in accordance with IFRS 16.
The Group initially records a lease liability reflecting the present value of the future contractual cash flows to be made over the lease term, discounted using the rate implicit in the lease, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Where this rate is not readily available, the Group applies the incremental borrowing rate applicable for each lease arrangement. A right-of-use asset is also recorded at the value of the lease liability plus any directly related costs and estimated dilapidation expenses and is presented within property, plant and equipment. Interest is accrued on the lease liability using the effective interest rate method to give a constant rate of return over the life of the lease whilst the balance is reduced as lease payments are made. The right-of-use asset is depreciated over the life of the lease as the benefit of the lease is consumed.
After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects the likelihood that it will exercise (or not exercise) a term extension option.
The cost of short-term (less than 12 months) leases is expensed on a straight-line basis over the lease term.
Deferred acquisition costs
Costs that are directly attributable to securing an investment management contract are deferred if they can be identified separately and measured reliably and it is probable that they will be recovered. Deferred acquisition costs represent the incremental costs incurred by the Group to acquire an investment management contract, typically on a closed-ended fund. The Group amortises the deferred acquisition asset recognised on a systematic basis, in line with the revenue generated from providing the investment management services over the life of the fund.
Financial instruments
Recognition and initial measurement
Financial instruments are recognised when the Group becomes party to the contractual provisions of an instrument, initially at fair value plus transaction costs except for financial assets classified at fair value through profit or loss. Purchases or sales of financial assets are recognised on the trade date, being the date that the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or been transferred or when the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligation under the liability has been discharged, cancelled or expires.
Subsequent measurement
The subsequent measurement of financial instruments depends on their classification in accordance with IFRS 9 Financial Instruments.
Under IFRS 9, the Group classifies its financial assets into two measurement categories: amortised cost and FVTPL. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All financial assets not classified as measured at amortised cost are measured at FVTPL. The Group classifies its financial liabilities at amortised cost or derivative liabilities measured at FVTPL.
Amortised cost is the amount determined based on moving the initial amount recognised for the financial instrument to the maturity value on a systematic basis using a fixed interest rate (effective interest rate), taking account of repayment dates and initial premiums or discounts.
Financial assets
The Group classifies its financial assets into the following categories: investment securities at FVTPL, financial assets at FVTPL and financial assets measured at amortised cost.
The Group may, from time to time, invest seed capital in funds where a subsidiary is the investment manager or an adviser. Where the holding in such investments is deemed to represent a controlling stake and is acquired exclusively with a view to subsequent disposal through sale or dilution, these seed capital investments are recognised as financial assets measured at FVTPL. If a seed capital investment remains under the control of the Group for more than one year from the original investment date, the underlying fund is consolidated line by line.
Investment securities at FVTPL
Investment securities represent securities, other than derivatives, held by consolidated funds. These securities are measured at fair value with gains and losses recognised through the consolidated statement of comprehensive income.
Financial assets at FVTPL
Financial assets at FVTPL include certain readily realisable interests in seeded funds, non-current financial assets measured at fair value and derivatives. From the date the financial asset is recognised, all subsequent changes in fair value, foreign exchange differences, interest and dividends are reflected in the consolidated statement of comprehensive income and presented in finance income or expense.
(i) Non-current financial assets measured at fair value
Non-current financial assets include closed-end funds that are measured at FVTPL. They are held at fair value with changes in fair value being recognised through the consolidated statement of comprehensive income.
(ii) Current financial assets measured at fair value
The Group classifies readily realisable interests in seeded funds as current financial assets measured at FVTPL with fair value changes being directly recognised through the consolidated statement of comprehensive income. Fair value is measured based on the proportionate net asset value in the fund.
(iii) Derivatives
Derivatives include foreign exchange forward contracts and options used by the Group to manage its foreign currency exposures and those held in consolidated funds. Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and subsequently remeasured at fair value. Transaction costs are recognised immediately in the statement of comprehensive income. All derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly in comprehensive income, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income.
Financial assets measured at amortised cost
(i) Trade and other receivables
Trade and other receivables are initially recorded at fair value plus transaction costs. The fair value on acquisition is normally the cost. Subsequent to initial recognition these assets are measured at amortised cost less impairment loss allowances. Impairment losses are recognised in the statement of comprehensive income for expected credit losses, and changes in those expected credit losses over the life of the instrument. Loss allowances are calculated based on lifetime expected credit losses at each reporting date.
(ii) Cash and cash equivalents
Cash represents cash at bank and in hand, and cash equivalents comprise short-term deposits and investments in money market instruments that are redeemable on demand or with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
Financial liabilities
The Group classifies its financial liabilities into the following categories: financial liabilities at FVTPL and financial liabilities at amortised cost.
Financial liabilities at FVTPL
Financial liabilities at FVTPL include derivative financial instruments and third-party interests in consolidated funds. They are carried at fair value with gains or losses recognised in the consolidated statement of comprehensive income within finance income or expense.
Financial liabilities at amortised cost
Other financial liabilities including trade and other payables are subsequently measured at amortised cost using the effective interest rate method. Interest expense is recognised as it is incurred using the effective interest method, which allocates interest at a constant rate of return over the expected life of the financial instrument based on the estimated future cash flows.
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the 'exit price') in an orderly transaction between market participants at the measurement date. In determining fair value, the Group uses various valuation approaches and establishes a hierarchy for inputs used in measuring fair value that maximises the use of relevant observable inputs and minimises the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Group.
Unobservable inputs are inputs that reflect the Group's judgements about the assumptions other market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances.
Securities listed on a recognised stock exchange, or dealt on any other regulated market that operates regularly, is recognised and open to the public, are valued at the last known available closing bid price. If a security is traded on several actively traded and organised financial markets, the valuation is made on the basis of the last known bid price on the main market on which the securities are traded. In the case of securities for which trading on an actively traded and organised financial market is not significant, but which are bought and sold on a secondary market with regulated trading among security dealers (with the effect that the price is set on a market basis), the valuation may be based on this secondary market.
Where instruments are not listed on any stock exchange or not traded on any regulated markets, valuation techniques are used by valuation specialists. These techniques include the market approach, the income approach or the cost approach. The use of the market approach generally consists of using comparable market transactions or using techniques based on market observable inputs, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as deemed appropriate for liquidity, credit, market and/or other risk factors.
Investments in funds are valued on the basis of the last available net asset value of the units or shares of such funds.
The fair value of the derivatives is their quoted market price at the balance sheet date.
Hedge accounting
The Group applies the general hedge accounting model in IFRS 9. This requires the Group to ensure that hedge accounting relationships are aligned with its risk management objectives and strategy and to apply a more qualitative and forward-looking approach to assessing hedge effectiveness.
The Group uses forward and option contracts to hedge the variability in cash flows arising from changes in foreign exchange rates relating to management fee revenues. The Group designates only the change in fair value of the spot element of the forward and option contracts in cash flow hedging relationships. The effective portion of changes in fair value of hedging instruments is accumulated in a cash flow hedge reserve as a separate component of equity.
The Group applies cash flow hedge accounting when the transaction meets the specified hedge accounting criteria. To qualify, the following conditions must be met:
- formal documentation of the relationship between the hedging instrument(s) and hedged item(s) must exist at inception;
- the hedged cash flows must be highly probable and must present an exposure to variations in cash flows that could ultimately affect comprehensive income;
- the effectiveness of the hedge can be reliably measured; and
- the hedge must be highly effective, with effectiveness assessed on an ongoing basis.
For qualifying cash flow hedges, the change in fair value of the effective hedging instrument is initially recognised in other comprehensive income and is released to comprehensive income in the same period during which the relevant financial asset or liability affects the Group's results.
Where the hedge is highly effective overall, any ineffective portion of the hedge is immediately recognised in comprehensive income. Where the instrument ceases to be highly effective as a hedge, or is sold, terminated or exercised, hedge accounting is discontinued.
Derecognition of financial assets and liabilities
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risk and rewards of ownership of the asset. The Group derecognises a financial liability when the Group's obligations are discharged, cancelled or they expire.
Impairment of financial assets
Under IFRS 9, impairment losses on the Group's financial assets at amortised cost are measured using an expected credit loss (ECL) model. Under this model, the Group is required to account for expected credit losses, and changes in those expected credit losses, over the life of the instrument. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition and, consequently, more timely information is provided about expected credit losses.
The Group applies the simplified approach to calculate expected credit losses for financial assets measured at amortised cost. Under this approach, expected credit losses are calculated based on the life of the instrument.
Assets measured at amortised cost
The Group measures loss allowances at an amount equal to lifetime expected credit losses. Expected credit loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. The Group's financial assets subject to impairment assessment under the ECL model comprise cash deposits held with banks and trade receivables. In assessing the impairment of financial assets under the ECL model, the Group assesses whether the risk of default has increased significantly since initial recognition, by considering both quantitative and qualitative information, and the analysis is based on the Group's historical experience of credit default, including forward-looking information.
The Group's trade receivables comprise balances due from management fees, performance fees and expense recoveries from funds managed, and are generally short term and do not contain financing components. Factors considered in determining whether a default has taken place include how many days past the due date a payment is, deterioration in the credit quality of a counterparty, and knowledge of specific events that could influence a counterparty's ability to pay.
The Group assesses lifetime expected credit losses based on historical observed default rates, adjusted by forward-looking estimates regarding the economic conditions within the next year. Externally derived credit ratings have been identified as representing the best available determinant of counterparty credit risk for cash balances and credit risk is deemed to have increased significantly if the credit rating has significantly deteriorated at the reporting date relative to the credit rating at the date of initial recognition.
Impairment of non-financial assets
For all other assets other than goodwill, an impairment test is performed annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets, other than goodwill, that have suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
Goodwill
Goodwill is tested for impairment annually or whenever there is an indication that the carrying amount may not be recoverable based on management's judgements regarding the future prospects of the business, estimates of future cash flows and discount rates. When assessing the appropriateness of the carrying value of goodwill at year end, the recoverable amount is considered to be the greater of fair value less costs to sell or value in use. The pre-tax discount rate applied is based on the Group's weighted average cost of capital after making allowances for any specific risks.
The business of the Group is managed as a single unit, with asset allocations, research and other such operational practices reflecting the commonality of approach across all fund themes. Therefore, for the purpose of testing goodwill for impairment, the Group is considered to have one cash-generating unit to which all goodwill is allocated and, as a result, no further split of goodwill into smaller cash-generating units is possible and the impairment review is conducted for the Group as a whole.
An impairment loss in respect of goodwill cannot be reversed.
Net revenue
Net revenue is total revenue less distribution costs and including foreign exchange. The Group's total revenue includes management fees, performance fees and other revenue. The primary revenue source for the Group is fee income received or receivable for the provision of investment management services.
The Group recognises revenue in accordance with the principles of IFRS 15 Revenue from Contracts with Customers.
The core principle of IFRS 15 is that revenue is recognised to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Group applies the IFRS 15 five-step model for recognising revenue, which consists of identifying the contract with the customer; identifying the relevant performance obligations; determining the amount of consideration to be received under the contract; allocating the consideration to each performance obligation; and earning the revenue as the performance obligations are satisfied.
The Group's principal revenue recognition policies are summarised below:
Management fees
Management fees are presented net of rebates, and are calculated as a percentage of net fund assets managed in accordance with individual management agreements. Management fees are calculated and recognised on a monthly basis in accordance with the terms of the management fee agreements. Management fees are typically collected on a monthly or quarterly basis.
Performance fees
Performance fees are presented net of rebates, and are calculated as a percentage of the appreciation in the net asset value of a fund above a defined hurdle. Performance fees are earned from some arrangements when contractually agreed performance levels are exceeded within specified performance measurement periods, typically over one year. The fees are recognised when they can be reliably estimated and/or crystallised, and there is deemed to be a low probability of a significant reversal in future periods. This is usually at the end of the performance period or upon early redemption by a fund investor. Once crystallised, performance fees typically cannot be clawed-back.
Rebates
Rebates relate to repayments of management and performance fees charged subject to a rebate agreement, typically with institutional investors, and are calculated based on an agreed percentage of net fund assets managed and recognised as the service is received. Where rebate agreements exist, management and performance fees are presented on a net basis in the consolidated statement of comprehensive income.
Other revenue
Other revenue principally comprises fees for other services, which are typically driven by the volume of transactions, along with revenues that vary in accordance with the volume of fund project development activities.
Other revenue includes transaction, structuring and administration fees, project management fees, and reimbursement by funds of costs incurred by the Group. This revenue is recognised as the relevant service is provided and it is probable that the fee will be collected.
Distribution costs
Distribution costs are costs of sales payable to external intermediaries for marketing and investor servicing. Distribution costs vary based on fund assets managed and the associated management fee revenue, and are expensed over the period in which the service is provided.
Employee benefits
Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of comprehensive income when payable in accordance with the scheme particulars.
Share-based payments
The Group issues share awards to its employees under share-based compensation plans.
For equity-settled awards, the fair value of the amounts payable to employees is recognised as an expense with a corresponding increase in equity over the vesting period after adjusting for the estimated number of shares that are expected to vest. The fair value is measured at the grant date using an appropriate valuation model, taking into account the terms and conditions upon which the instruments were granted. At each balance sheet date prior to vesting, the cumulative expense representing the extent to which the vesting period has expired and management's best estimate of the awards that are ultimately expected to vest is calculated. The movement in cumulative expense is recognised in the statement of comprehensive income with a corresponding entry within equity.
For cash-settled awards, the fair value of the amounts payable to employees is recognised as an expense with a corresponding liability on the Group's balance sheet. The fair value is measured using an appropriate valuation model, taking into account the estimated number of awards that are expected to vest and the terms and conditions upon which the instruments were granted. During the vesting period, the liability recognised represents the portion of the vesting period that has expired at the balance sheet date multiplied by the fair value of the awards at that date. Movements in the liability are recognised in the statement of comprehensive income.
The Group has in place an intragroup recharge arrangement for equity-settled share-based awards whereby the parent Company is reimbursed based on the grant-date cost of share awards granted to employees of the subsidiary entity. During the vest period, the subsidiary entity recognises a share-based payment expense in accordance with IFRS 2 requirements with an intercompany payable to the parent Company. The parent Company recognises an intercompany receivable and a corresponding credit within equity as a share-based payment reserve. The intercompany balances are settled regularly and reported as current assets/liabilities.
Finance income and expense
Finance income includes interest receivable on the Group's cash and cash equivalents, and both realised and unrealised gains on financial assets at FVTPL.
Finance expense includes both realised and unrealised losses on financial assets at FVTPL. Interest expense on lease liabilities is presented within finance expense.
Taxation
Tax expense for the year comprises current and deferred tax. Tax is recognised in the consolidated statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year, and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the balance sheet date in the countries where the Group operates. Current tax also includes withholding tax arising from dividends.
Deferred tax
Deferred tax is recognised using the balance sheet liability method, in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following differences are not provided for:
- goodwill not deductible for tax purposes; and
- differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the balance sheet date.
Dividends
Dividends are recognised when shareholders' rights to receive payments have been established.
Equity shares
The Company's ordinary shares of 0.01 pence each are classified as equity instruments. Ordinary shares issued by the Company are recorded at the fair value of the consideration received or the market price at the day of issue. Direct issue costs, net of tax, are deducted from equity through share premium. When share capital is repurchased, the amount of consideration paid, including directly attributable costs, is recognised as a change in equity.
Own shares
Own shares are held by the Employee Benefit Trust (EBT). The holding of the EBT comprises own shares that have not vested unconditionally to employees of the Group. In both the Group and Company, own shares are recorded at cost and are deducted from retained earnings.
Segmental information
Key management information, including revenues, margins, investment performance, distribution costs and AuM flows, which is relevant to the operation of the Group, is reported to and reviewed by the Board on the basis of the investment management business as a whole. Hence, the Group's management considers that the Group's services and its operations are not run on a discrete geographic basis and comprise one business segment (being provision of investment management services).
Company-only accounting policies
In addition to the above accounting policies, the following specifically relates to the Company:
Investment in subsidiaries
Investments by the Company in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
5) Segmental information
The Group's operations are reported to and reviewed by the Board on the basis of the investment management business as a whole, hence the Group is treated as a single segment. The key management information considered is adjusted EBITDA which is £106.2 million for the year as reconciled in the Business review (FY2022: adjusted EBITDA of £164.3 million was derived by adjusting operating profit by £3.1 million of depreciation and amortisation expense, £46.2 million of loss related to seed capital and £4.2 million of foreign exchange gains). The disclosures below are supplementary, and provide the location of the Group's non-current assets at year end other than financial assets and deferred tax assets. Disclosures relating to revenue by location are in note 6.
Analysis of non-current assets by geography
| | 2023 | 2022 |
| United Kingdom and Ireland | 24.3 | 26.5 |
| United States | 69.8 | 73.5 |
| Other | 1.9 | 2.5 |
| Total non-current assets | 96.0 | 102.5 |
6) Revenue
Management fees are accrued throughout the year in line with prevailing levels of AuM and performance fees are recognised when they can be estimated reliably and it is probable that they will crystallise. The Group is not considered to be reliant on any single source of revenue. During the year, none of the Group's funds (FY2022: none) provided more than 10% of total revenue in the year respectively when considering management fees and performance fees on a combined basis.
Analysis of revenue by geography
| | 2023 | 2022 |
| United Kingdom and Ireland | 142.3 | 193.6 |
| United States | 13.7 | 22.0 |
| Other | 37.2 | 38.8 |
| Total revenue | 193.2 | 254.4 |
7) Foreign exchange
The foreign exchange rates which had a material impact on the Group's results are the US dollar, the Euro, the Indonesian rupiah and the Colombian peso.
| £1 | Closing rate | Closing rate | Average rate | Average rate |
| US dollar | 1.2714 | 1.2145 | 1.2079 | 1.3289 |
| Euro | 1.1653 | 1.1617 | 1.1523 | 1.1785 |
| Indonesian rupiah | 19,061 | 18,092 | 18,259 | 19,146 |
| Colombian peso | 5,309 | 5,053 | 5,519 | 5,164 |
Foreign exchange gains are shown below.
| | 2023 | 2022 |
| Net realised and unrealised hedging gains | 4.4 | 6.3 |
| Translation gains on non-Sterling denominated monetary assets and liabilities | 1.0 | 5.3 |
| Total foreign exchange gains | 5.4 | 11.6 |
8) Finance income/(expense)
| | 2023 | 2022 |
| Interest and investment income | 27.2 | 7.7 |
| Net realised gains on seed capital investments measured at fair value | 2.4 | 0.1 |
| Net unrealised gains/(losses) on seed capital investments measured at fair value | 4.6 | (9.5) |
| Interest expense on lease liabilities (note 16) | (0.3) | (0.4) |
| Total finance income/(expense) | 33.9 | (2.1) |
Included within interest and investment income is interest earned on cash deposits of £16.2 million (FY2022: £2.0 million) and investment income of £11.0 million (FY2022: £5.7 million) on consolidated funds (note 20c).
Included within net realised and unrealised gains on seed capital investments totalling £7.0 million (FY2022: £9.4 million losses) are £2.6 million gains (FY2022: £12.5 million losses) on financial assets measured at FVTPL (note 20a), £1.4 million gains (FY2022: £4.2 million gains) on non-current financial assets measured at fair value (note 20b) and £3.0m realised gains on consolidated funds (FY2022: £1.1 million losses on financial assets held for sale).
9) Personnel expenses
Personnel expenses during the year comprised the following:
| | 2023 | 2022 |
| Wages and salaries | 24.0 | 22.1 |
| Performance-related cash bonuses | 17.3 | 20.7 |
| Share-based payments (note 10) | 17.5 | 24.9 |
| Social security costs | 2.4 | 1.9 |
| Pension costs | 2.1 | 1.8 |
| Other costs | 2.9 | 2.0 |
| Total personnel expenses | 66.2 | 73.4 |
Number of employees
At 30 June 2023, the number of investment management employees of the Group (including Executive Directors) during the year was as follows:
| | Average for | Average for | At | At |
| Total investment management employees | 309 | 305 | 310 | 309 |
Directors' remuneration
Disclosures of Directors' remuneration during the year as required by the Companies Act 2006 are included in the Remuneration report.
There are retirement benefits accruing to two Executive Directors under a defined contribution scheme (FY2022: two).
10) Share-based payments
The cost related to share-based payments recognised by the Group in the statement of comprehensive income is shown below:
| Group | 2023 | 2022 |
| Omnibus Plan | 17.4 | 25.1 |
| Phantom Bonus Plan | 0.1 | (0.2) |
| Total share-based payments expense | 17.5 | 24.9 |
The total expense recognised for the year in respect of equity-settled share-based payment awards was £18.5 million (FY2022: £24.5 million), of which £0.4 million (FY2022: £0.2 million) relates to share awards granted to key management personnel.
The Executive Omnibus Incentive Plan (Omnibus Plan)
The Omnibus Plan was introduced prior to the Company listing in October 2006 and provides for the grant of share awards, market value options, premium cost options, discounted options, linked options, phantoms and/or nil-cost options to employees. The Omnibus Plan will also allow bonuses to be deferred in the form of share awards with or without matching shares. Awards granted under the Omnibus Plan typically vest after five years from date of grant, with the exception of bonus awards which vest after the shorter of five years from date of grant or on the date of termination of employment. Awards under the Omnibus Plan are accounted for as equity-settled, with the exception of phantoms which are classified as cash-settled.
The combined cash and equity-settled payments below represent the share-based payments relating to the Omnibus Plan.
Total expense by year awards were granted (excluding national insurance)
| Group and Company | 2023 | 2022 |
| 2017 | - | 3.2 |
| 2018 | 3.0 | 2.9 |
| 2019 | 3.7 | 3.5 |
| 2020 | 3.5 | 3.5 |
| 2021 | 3.9 | 5.5 |
| 2022 | 3.3 | 5.7 |
| 2023 | 1.2 | - |
| Total Omnibus share-based payments expense reported in comprehensive income | 18.6 | 24.3 |
Awards outstanding under the Omnibus Plan were as follows:
i) Equity-settled awards
| Group and Company | 2023 | 2023 | 2022 | 2022 |
| Restricted share awards | | | | |
| At the beginning of the year | 19,311,495 | £3.65 | 19,997,393 | £3.58 |
| Granted | 5,553,128 | £2.14 | 4,423,544 | £3.71 |
| Vested | (4,671,286) | £3.25 | (3,874,613) | £3.44 |
| Forfeited | (1,160,520) | £2.17 | (1,234,829) | £3.44 |
| Awards outstanding at year end | 19,032,817 | £3.32 | 19,311,495 | £3.65 |
| | | | | |
| Bonus share awards | | | | |
| At the beginning of the year | 10,997,593 | £3.64 | 10,617,648 | £3.58 |
| Granted | 3,014,720 | £2.14 | 2,285,034 | £3.75 |
| Vested | (3,686,132) | £2.87 | (1,905,089) | £3.44 |
| Forfeited | (179,660) | £3.67 | - | - |
| Awards outstanding at year end | 10,146,521 | £3.31 | 10,997,593 | £3.64 |
| | | | | |
| Matching share awards | | | | |
| At the beginning of the year | 10,379,745 | £3.65 | 10,687,135 | £3.58 |
| Granted | 3,031,105 | £2.14 | 2,297,585 | £3.75 |
| Vested | (2,547,699) | £3.28 | (1,881,231) | £3.44 |
| Forfeited | (652,622) | £2.18 | (723,744) | £3.42 |
| Awards outstanding at year end | 10,210,529 | £3.31 | 10,379,745 | £3.65 |
| Total | 39,389,867 | £3.32 | 40,688,833 | £3.65 |
ii) Cash-settled awards
| Group and Company | 2023 | 2023 | 2022 | 2022 |
| Restricted share awards | | | | |
| At the beginning of the year | 110,280 | £3.60 | 122,239 | £3.53 |
| Granted | 47,785 | £2.14 | 15,741 | £3.75 |
| Vested | (45,003) | £3.24 | (27,700) | £3.40 |
| Forfeited | - | - | - | - |
| Awards outstanding at year end | 113,062 | £3.13 | 110,280 | £3.60 |
| | | | | |
| Bonus share awards | | | | |
| At the beginning of the year | 80,511 | £3.60 | 80,765 | £3.55 |
| Granted | 34,982 | £2.14 | 11,276 | £3.75 |
| Vested | (33,753) | £3.24 | (11,530) | £3.40 |
| Forfeited | - | - | - | - |
| Awards outstanding at year end | 81,740 | £3.12 | 80,511 | £3.60 |
| | | | | |
| Matching share awards | | | | |
| At the beginning of the year | 80,511 | £3.60 | 80,765 | £3.55 |
| Granted | 34,982 | £2.14 | 11,276 | £3.75 |
| Vested | (33,753) | £3.24 | (11,530) | £3.40 |
| Forfeited | - | - | - | - |
| Awards outstanding at year end | 81,740 | £3.12 | 80,511 | £3.60 |
| Total | 276,542 | £3.13 | 271,302 | £3.60 |
iii) Total awards
| Group and Company | 2023 | 2023 | 2022 | 2022 |
| Restricted share awards | | | | |
| At the beginning of the year | 19,421,775 | £3.65 | 20,119,632 | £3.58 |
| Granted | 5,600,913 | £2.14 | 4,439,285 | £3.71 |
| Vested | (4,716,289) | £3.25 | (3,902,313) | £3.44 |
| Forfeited | (1,160,520) | £2.17 | (1,234,829) | £3.44 |
| Awards outstanding at year end | 19,145,879 | £3.32 | 19,421,775 | £3.65 |
| | | | | |
| Bonus share awards | | | | |
| At the beginning of the year | 11,078,104 | £3.64 | 10,698,413 | £3.58 |
| Granted | 3,049,702 | £2.14 | 2,296,310 | £3.75 |
| Vested | (3,719,885) | £2.87 | (1,916,619) | £3.44 |
| Forfeited | (179,660) | £3.67 | - | - |
| Awards outstanding at year end | 10,228,261 | £3.31 | 11,078,104 | £3.64 |
| | | | | |
| Matching share awards | | | | |
| At the beginning of the year | 10,460,256 | £3.65 | 10,767,900 | £3.58 |
| Granted | 3,066,087 | £2.14 | 2,308,861 | £3.75 |
| Vested | (2,581,452) | £3.28 | (1,892,761) | £3.44 |
| Forfeited | (652,622) | £2.18 | (723,744) | £3.42 |
| Awards outstanding at year end | 10,292,269 | £3.31 | 10,460,256 | £3.65 |
| Total | 39,666,409 | £3.32 | 40,960,135 | £3.65 |
The weighted average fair value of awards granted to employees under the Omnibus Plan during the year was £2.14 (FY2022: £3.73), calculated based on the average Ashmore Group plc closing share price for the five business days prior to grant. For Executive Directors, the fair value of awards also takes into account the performance conditions set out in the Remuneration report.
Where the grant of restricted and matching share awards is linked to the annual bonus process, the fair value of the awards is spread over a period including the current financial year and the subsequent five years to their vesting date when the grantee becomes unconditionally entitled to the underlying shares. The fair value of the remaining awards is spread over the period from the date of grant to the vesting date.
The liability arising from cash-settled awards under the Omnibus Plan at the end of the year and reported within trade and other payables on the Group consolidated balance sheet is £0.3 million (30 June 2022: £0.4 million) of which £nil (30 June 2022: £nil) relates to vested awards.
11) Other expenses
Other expenses consist of the following:
| | 2023 | 2022 |
| Travel | 2.1 | 0.9 |
| Professional fees | 5.5 | 4.7 |
| Information technology and communications | 7.8 | 7.3 |
| Amortisation of intangible assets (note 15) | 0.2 | 0.2 |
| Lease expenses | 0.4 | 0.4 |
| Depreciation of property, plant and equipment (note 16) | 3.0 | 2.9 |
| Premises-related costs | 1.3 | 1.3 |
| Insurance | 1.0 | 1.0 |
| Research costs | 0.4 | 0.4 |
| Auditor's remuneration (see below) | 0.9 | 0.9 |
| Consolidated funds | 1.1 | 1.2 |
| Other expenses | 4.1 | 3.9 |
| | 27.8 | 25.1 |
Lease expenses relates to short-term leases where the Group has applied the optional exemption contained within IFRS 16, which permits the cost of short-term leases (less than 12 months) to be expensed on a straight-line basis over the lease term.
Auditor's remuneration
| | 2023 | 2022 |
| Fees for statutory audit services: | | |
| - Fees payable to the Company's auditor for the audit of the Group's accounts | 0.2 | 0.2 |
| - Fees payable to the Company's auditor and its associates for the audit of the Company's subsidiaries pursuant to legislation |
|
0.5 |
| | | |
| Fees for non-audit services: | | |
| - Other non-audit services | 0.2 | 0.2 |
| | 0.9 | 0.9 |
12) Taxation
Analysis of tax charge for the year:
| | 2023 | 2022 |
| Current tax | | |
| UK corporation tax on profits for the year | 5.6 | 11.1 |
| Overseas corporation tax charge | 10.5 | 14.9 |
| Adjustments in respect of prior years | 0.1 | (0.5) |
| | 16.2 | 25.5 |
| Deferred tax | | |
| Origination and reversal of temporary differences (note 18) | 9.1 | 1.0 |
| Tax expense | 25.3 | 26.5 |
Factors affecting tax charge for the year
| | 2023 | 2022 |
| Profit before tax | 111.8 | 118.4 |
| | | |
| Profit on ordinary activities multiplied by the blended UK tax rate of 20.5% (FY2022: UK tax rate of 19%) | 22.9 | 22.5 |
| | | |
| Effects of: | | |
| Permanent differences including non-taxable income and non-deductible expenses | 7.4 | 4.7 |
| Different rate of taxes on overseas profits | (3.2) | (3.3) |
| Non-deductible/(non-taxable) investment returns1 | (1.9) | 3.2 |
| Adjustments in respect of prior years | 0.1 | (0.6) |
| Tax expense | 25.3 | 26.5 |
1. Non-taxable investment returns comprise seed capital investment gains/losses in certain jurisdictions in which the Group operates for which there are local tax exemptions.
The tax charge/(credit) recognised in reserves within other comprehensive income is as follows:
| | 2023 | 2022 |
| Current tax expense/(credit) on foreign exchange gains/(losses) | (0.6) | 2.9 |
| Tax expense/(credit) recognised in reserves | (0.6) | 2.9 |
13) Earnings per share
Basic earnings per share at 30 June 2023 of 12.43 pence (30 June 2022: 13.42 pence) is calculated by dividing the profit after tax for the financial year attributable to equity holders of the parent of £83.3 million (FY2022: £88.5 million) by the weighted average number of ordinary shares in issue during the year, excluding own shares.
Diluted earnings per share is calculated based on basic earnings per share adjusted for dilutive potential ordinary shares. There is no difference between the profit for the year attributable to equity holders of the parent used in the basic and diluted earnings per share calculations.
The weighted average number of shares used in calculating basic and diluted earnings per share are shown below.
| | 2023 | 2022 |
| Weighted average number of ordinary shares used in the calculation of basic earnings per share | 670,224,113 | 659,466,487 |
| Weighted average number of ordinary shares used in the calculation of diluted earnings per share | 685,760,649 | 702,124,339 |
14) Dividends
Dividends paid in the year
| Company | 2023 | 2022 |
| Final dividend for FY2022 - 12.10p (FY2021: 12.10p) | 84.8 | 85.0 |
| Interim dividend FY2023 - 4.80p (FY2022: 4.80p) | 33.6 | 33.5 |
| | 118.4 | 118.5 |
In addition, the Group paid £3.3 million (FY2022: £3.0 million) of dividends to non-controlling interests.
Dividends declared/proposed in respect of the year
| Company | 2023 | 2022 |
| Interim dividend per share paid | 4.80 | 4.80 |
| Final dividend per share proposed | 12.10 | 12.10 |
| | 16.90 | 16.90 |
On 5 September 2023, the Board proposed a final dividend of 12.10 pence per share for the year ended 30 June 2023. This has not been recognised as a liability of the Group at the year end as it has not yet been approved by shareholders. Based on the number of shares in issue at the year end that qualify to receive a dividend, the total amount payable would be £85.1 million.
15) Goodwill and intangible assets
| Group | Goodwill | Fund management intangible assets | Total |
| Cost (at original exchange rate) | | | |
| At 30 June 2023 and 2022 | 70.4 | 0.9 | 71.3 |
| | | | |
| Accumulated amortisation and impairment | | | |
| At 30 June 2021 | - | (0.5) | (0.5) |
| Amortisation charge for the year | - | (0.1) | (0.1) |
| At 30 June 2022 | - | (0.6) | (0.6) |
| Amortisation charge for the year | - | (0.1) | (0.1) |
| At 30 June 2023 | - | (0.7) | (0.7) |
| | | | |
| Net book value | | | |
| At 30 June 2021 | 80.1 | 0.4 | 80.5 |
| Accumulated amortisation for the year | - | (0.1) | (0.1) |
| Foreign exchange revaluation through reserves* | 10.4 | 0.1 | 10.5 |
| At 30 June 2022 | 90.5 | 0.4 | 90.9 |
| Accumulated amortisation for the year | - | (0.1) | (0.1) |
| Foreign exchange revaluation through reserves* | (3.8) | (0.1) | (3.9) |
| At 30 June 2023 | 86.7 | 0.2 | 86.9 |
* Foreign exchange revaluation through reserves is a result of the retranslation of US dollar-denominated intangibles and goodwill.
| Company | Goodwill |
| Cost | |
| At the beginning and end of the year | 4.1 |
| Net carrying amount at 30 June 2023 and 2022 | 4.1 |
Goodwill
The Group's goodwill balance relates to the acquisition of subsidiaries. The Company's goodwill balance relates to the acquisition of the business from ANZ in 1999.
Goodwill acquired in a business combination is allocated to the cash-generating units that are expected to benefit from that business combination. It is the Group's judgement that the lowest level of cash-generating unit used to determine impairment is the investment management segment level. The Group has assessed that it consists of a single cash-generating unit for the purposes of monitoring and assessing goodwill for impairment. This reflects the Group's global operating model, based on a single operating platform, into which acquired businesses are fully integrated and from which acquisition-related synergies are expected to be realised. Based on this model, the Group's investment management activities are considered as a single cash-generating unit, for which key management regularly receive and review internal financial information.
An annual impairment review of goodwill was undertaken for the year ending 30 June 2023, and no factors indicating potential impairment of goodwill were noted. Goodwill is tested for impairment annually or whenever there is an indication that the carrying amount may not be recoverable based on management's judgements regarding the future prospects of the business, market capitalisation, macroeconomic and market considerations. The key assumption used to determine the recoverable amount is based on a fair value calculation using the Company's market share price.
Based on the calculation as at 30 June 2023 using a market share price of £2.08, the recoverable amount was in excess of the carrying value of goodwill and no impairment was implied. In addition, the sensitivity of the recoverable amount to a 10% change in the Company's market share price will not lead to any impairment. Therefore, no impairment loss has been recognised in the current or preceding years.
Fund management intangible assets
Intangible assets as at 30 June 2023 comprise fund management contracts recognised by the Group on the acquisition of Ashmore Avenida Investments (Real Estate) LLP in July 2018.
16) Property, plant and equipment
The Group's property, plant and equipment include right-of-use assets recognised on lease arrangements as follows:
| | Group | Company |
| Property, plant and equipment owned by the Group | 1.2 | 0.9 |
| Right-of-use assets | 5.3 | 3.2 |
| Net book value at 30 June 2023 | 6.5 | 4.1 |
The movement in property, plant and equipment is provided below:
| Group | 2023 | 2022 |
| Cost | | |
| At the beginning of the year | 23.0 | 21.9 |
| Additions | 0.6 | 0.5 |
| Foreign exchange revaluation | (0.6) | 0.6 |
| At the end of the year | 23.0 | 23.0 |
| | | |
| Accumulated depreciation | | |
| At the beginning of the year | 13.9 | 10.7 |
| Depreciation charge for the year | 3.0 | 2.9 |
| Foreign exchange revaluation | (0.4) | 0.3 |
| At the end of the year | 16.5 | 13.9 |
| Net book value at 30 June | 6.5 | 9.1 |
| Company | 2023 | 2022 |
| Cost | | |
| At the beginning of the year | 13.9 | 13.5 |
| Additions | 0.3 | 0.4 |
| At the end of the year | 14.2 | 13.9 |
| | | |
| Accumulated depreciation | | |
| At the beginning of the year | 8.4 | 6.8 |
| Depreciation charge for year | 1.7 | 1.6 |
| At the end of the year | 10.1 | 8.4 |
| Net book value at 30 June | 4.1 | 5.5 |
Lease arrangements
The Group leases office space in various countries and enters into lease agreements on office premises with remaining lease periods of one to six years. Lease terms are negotiated on an individual basis and contain varying terms and conditions depending on location. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. The Group calculates the lease liabilities using the lessee's incremental borrowing rates that resulted in a weighted average incremental borrowing rate of 4.9% (FY2022: 4.6%).
The carrying value of right-of-use assets, lease liabilities and the movement during the year are set out below.
| | Group | Company | ||
| | Right-of-use assets | Lease | Right-of-use assets | Lease |
| At 30 June 2021 | 9.4 | 9.8 | 5.5 | 5.7 |
| Lease payments | - | (2.4) | - | (1.3) |
| Interest expense (note 8) | - | 0.4 | - | 0.2 |
| Depreciation charge | (2.1) | - | (1.1) | - |
| Foreign exchange revaluation through reserves | 0.3 | 0.2 | - | - |
| At 30 June 2022 | 7.6 | 8.0 | 4.4 | 4.6 |
| Additions | 0.2 | 0.1 | - | - |
| Lease payments | - | (2.5) | - | (1.3) |
| Interest expense (note 8) | - | 0.3 | - | 0.1 |
| Depreciation charge | (2.4) | - | (1.2) | - |
| Foreign exchange revaluation through reserves | (0.1) | (0.1) | - | - |
| At 30 June 2023 | 5.3 | 5.8 | 3.2 | 3.4 |
The contractual maturities on the minimum lease payments under lease liabilities are provided below:
| | Group | Company | ||
| Maturity analysis - contractual undiscounted cash flows | 30 June | 30 June | 30 June | 30 June |
| Within 1 year | 2.4 | 2.6 | 1.3 | 1.3 |
| Between 1 and 5 years | 3.9 | 6.0 | 2.3 | 3.7 |
| Later than 5 years | - | 0.2 | - | - |
| Total undiscounted lease liabilities | 6.3 | 8.8 | 3.6 | 5.0 |
| | | | | |
| Lease liabilities are presented in the balance sheet as follows: | | | | |
| Current | 2.1 | 2.2 | 1.2 | 1.3 |
| Non-current | 3.7 | 5.8 | 2.2 | 3.3 |
| Total lease liabilities | 5.8 | 8.0 | 3.4 | 4.6 |
| | | | | |
| Amounts recognised under financing activities in the cash flow statement: | | | | |
| Payment of lease liabilities | 2.2 | 2.0 | 1.2 | 1.1 |
| Interest paid | 0.3 | 0.4 | 0.1 | 0.2 |
| Total cash outflow for leases | 2.5 | 2.4 | 1.3 | 1.3 |
17) Trade and other receivables
| | Group | Company | ||
| | 2023 | 2022 | 2023 | 2022 |
| Trade debtors | 60.7 | 66.1 | 2.1 | 1.0 |
| Prepayments | 4.4 | 3.5 | 1.9 | 2.1 |
| Amounts due from subsidiaries | - | - | 10.4 | 73.8 |
| Loans due from subsidiaries | - | - | 266.4 | 376.9 |
| Other receivables | 5.3 | 4.7 | 3.6 | 3.1 |
| Total trade and other receivables | 70.4 | 74.3 | 284.4 | 456.9 |
Group trade debtors include accrued management and performance fees in respect of investment management services provided up to 30 June 2023. Management fees are received in cash when the funds' net asset values are determined, typically every month or every quarter. Performance fees are accrued when crystallised, and amounted to £1.3 million as at 30 June 2023 (30 June 2022: £0.5 million).
The majority of fees are deducted from the net asset values of the respective funds by independent administrators and therefore the credit risk of fee receivables is minimal. As at 30 June 2023, the assessed provision for expected credit losses was immaterial and the Group has not recognised any expected credit losses in the current year (30 June 2022: £nil).
Amounts due from subsidiaries for the Company represent intercompany trading balances that are repayable within one year.
Loans due from subsidiaries for the Company include an intercompany loan to a subsidiary related to the provision of funding for seed capital investments and cash invested by the subsidiary in daily-traded investment funds. Loans due from subsidiaries included within non-current assets amounted to £167.8 million as at 30 June 2023 (30 June 2022: £132.0 million included within non-current assets). The intercompany loan is repayable on demand and the amount classified as current is regularly settled during the year. Under the IFRS 9 expected credit loss model, credit risk is assessed by determining the borrower's capacity to meet contractual cash flow obligations, taking into account the available net assets to repay the intercompany balance in future periods. Expected credit losses are estimated based on the assumption that repayment is demanded at the reporting date. If the borrower has sufficient accessible highly liquid assets available to settle the balance if demanded at the reporting date, the expected credit loss has been assessed to be immaterial. In line with the Company's historical experience, and after consideration of current credit exposures, the Company does not expect to incur any credit losses and has not recognised any expected credit losses in the current year (30 June 2022: £nil).
18) Deferred taxation
Deferred tax assets and liabilities recognised by the Group and Company at year end are attributable to the following:
| | 2023 | 2022 | ||||
| Group | Other temporary differences | Share-based payments | Total | Other | Share-based payments | Total |
| Deferred tax assets | 11.0 | 12.9 | 23.9 | 12.5 | 20.2 | 32.7 |
| Deferred tax liabilities | (9.3) | - | (9.3) | (8.8) | - | (8.8) |
| | 1.7 | 12.9 | 14.6 | 3.7 | 20.2 | 23.9 |
| | | | | | | |
| | 2023 | 2022 | ||||
| Company | Other temporary differences | Share-based payments | Total | Other temporary differences | Share-based payments | Total |
| Deferred tax assets | - | 11.6 | 11.6 | - | 18.2 | 18.2 |
Deferred taxes at the balance sheet date reflected in these financial statements have been measured using the relevant enacted or substantively enacted tax rate for the year in which they are expected to be realised or settled.
Movement of deferred tax balances
The movement in the deferred tax balances between the balance sheet dates has been reflected in the statement of comprehensive income as follows:
| Group | Other | Share-based payments | Total |
| At 30 June 2021 | (2.9) | 27.2 | 24.3 |
| Credited/(charged) to the consolidated statement of comprehensive income | 6.0 | (7.0) | (1.0) |
| Foreign exchange revaluation | 0.6 | - | 0.6 |
| At 30 June 2022 | 3.7 | 20.2 | 23.9 |
| Charged to the consolidated statement of comprehensive income | (1.8) | (7.3) | (9.1) |
| Foreign exchange revaluation | (0.2) | - | (0.2) |
| At 30 June 2023 | 1.7 | 12.9 | 14.6 |
| | | | |
| Company | Other | Share-based payments | Total |
| At 30 June 2021 | - | 25.1 | 25.1 |
| Charged to the statement of comprehensive income | - | (6.9) | (6.9) |
| At 30 June 2022 | - | 18.2 | 18.2 |
| Charged to the statement of comprehensive income | - | (6.6) | (6.6) |
| At 30 June 2023 | - | 11.6 | 11.6 |
19) Fair value of financial instruments
The Group has an established control framework with respect to the measurement of fair values. This framework includes committees that have overall responsibility for all significant fair value measurements. Each committee regularly reviews significant inputs and valuation adjustments. If third-party information is used to measure fair value, the committee assesses and documents the evidence obtained from the third parties to support such valuations. There are no material differences between the carrying amounts of financial assets and liabilities and their fair values at the balance sheet date.
Fair value hierarchy
The Group measures fair values using the following fair value levels that reflect the significance of inputs used in making the measurements, based on the degree to which the fair value is observable:
- Level 1: Valuation is based upon a quoted market price in an active market for an identical instrument. This fair value measure relates
to the valuation of quoted and exchange traded equity and debt securities.
- Level 2: Valuation techniques are based upon observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
This fair value measure relates to the valuation of quoted equity securities in inactive markets or in interests in unlisted funds whose
net asset values are referenced to the fair values of the listed or exchange traded securities held by those funds. Valuation techniques may include using a broker quote in an inactive market or an evaluated price based on a compilation of primarily observable market information utilising information readily available via external sources.
- Level 3: Fair value measurements are derived from valuation techniques that include inputs not based on observable market data.
For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of the financial year.
The fair value hierarchy of financial instruments which are carried at fair value at year end is summarised below:
| | 2023 | 2022 | ||||||
| | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Financial assets | | | | | | | | |
| Investment securities | 112.3 | 88.8 | 28.8 | 229.9 | 158.8 | 82.7 | 23.6 | 265.1 |
| Financial assets measured at FVTPL | - | 55.8 | - | 55.8 | - | 32.3 | - | 32.3 |
| Non-current financial assets at fair value | - | 14.9 | 39.2 | 54.1 | - | - | 39.3 | 39.3 |
| | 112.3 | 159.5 | 68.0 | 339.8 | 158.8 | 115.0 | 62.9 | 336.7 |
| Financial liabilities | | | | | | | | |
| Third-party interests in consolidated funds | 36.0 | 9.6 | 10.6 | 56.2 | 58.4 | 6.3 | 8.3 | 73.0 |
| Derivative financial instruments | - | 0.2 | - | 0.2 | - | 5.2 | - | 5.2 |
| | 36.0 | 9.8 | 10.6 | 56.4 | 58.4 | 11.5 | 8.3 | 78.2 |
Transfers between levels
The Group recognises transfers into and transfers out of fair value hierarchy levels at each reporting period based on assessments of price inputs used in the valuation of financial assets. There were no transfers between level 1, level 2 and level 3 of the fair value hierarchy during the year.
Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items for the years ended 30 June 2023 and 2022:
| | Investment | Non-current | Third-party |
| At 30 June 2021 | 42.4 | 34.0 | 16.9 |
| Additions | - | 1.9 | - |
| Disposals | (25.5) | (1.5) | (10.7) |
| Transfers out | (1.5) | - | - |
| Unrealised gains recognised in finance income | 4.4 | 3.5 | 2.1 |
| Unrealised gains recognised in reserves | 3.8 | 1.4 | - |
| At 30 June 2022 | 23.6 | 39.3 | 8.3 |
| Additions | 2.5 | 2.9 | 1.2 |
| Disposals | (9.1) | (5.0) | (3.8) |
| Unrealised gains recognised in finance income | 12.0 | 2.0 | 4.9 |
| Unrealised losses recognised in reserves | (0.2) | - | - |
| At 30 June 2023 | 28.8 | 39.2 | 10.6 |
Valuation of level 3 financial assets recognised at fair value on a recurring basis using valuation techniques
Investments valued using valuation techniques include financial investments which, by their nature, do not have an externally quoted price based on regular trades, and financial investments for which markets are no longer active as a result of market conditions, e.g. market illiquidity. The valuation techniques used include comparison to recent arm's length transactions, market approach making reference to other instruments that are substantially the same, discounted cash flow analysis, enterprise valuation and net assets approach. These techniques may include a number of assumptions relating to variables such as interest rate and price earnings multiples. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these instruments. When determining the inputs into the valuation techniques used, priority is given to publicly available prices from independent sources when available, but overall the source of pricing is chosen with the objective of arriving at a fair value measurement that reflects the price at which an orderly transaction would take place between market participants on the measurement date.
The fair value estimates are made at a specific point in time, based upon available market information and judgements about the financial instruments, including estimates of the timing and amount of expected future cash flows. Such estimates could include a marketability adjustment to reflect illiquidity and/or non-transferability that could result from offering for sale at one time the Group's entire holdings of a particular financial instrument.
The following tables show the valuation techniques and the significant unobservable inputs used to estimate the fair value of level 3 investments as at 30 June 2023 and 2022, and the associated sensitivity to changes in unobservable inputs to a reasonable alternative.
| Asset class and valuation technique | 2023 | | Significant | | Range of estimates | | Sensitivity | Change in |
| Unquoted securities | | | | | | | | |
| Market multiple and discount | 6.4 | | EBITDA multiple | | 15x | | +/- 1x | +/- 0.6 |
| | Marketability adjustment | | 30% | | +/- 5% | -/+ 0.7 | ||
| Discounted cash flow | 32.3 | | Discount rate | | 10%-17% | | +/- 1% | -/+ 3.0 |
| | Marketability adjustment | | 10%-54% | | +/- 5% | -/+ 2.8 | ||
| Unquoted funds | | | | | | | | |
| Net assets approach | 29.3 | | NAV1 | | 1x | | +/- 5% | +/- 1.5 |
| Total level 3 investments | 68.0 | | | | | | | |
| Asset class and valuation technique | 2022 | | Significant | | Range of | | Sensitivity | Change in | |||
| Unquoted securities | | | | | | | | | |||
| Market multiple and discount | 6.2 | | EBITDA multiple | | 14x | | +/- 1x | +/- 0.5 | |||
| | Marketability adjustment | | 30% | | +/- 5% | -/+ 0.4 | |||||
| Discounted cash flow | 26.3 | | Discount rate | | 10%-20% | | +/- 1% | -/+ 3.6 | |||
| | Marketability adjustment | | 10%-60% | | +/- 5% | -/+ 1.5 | |||||
| Unquoted funds | | | | | | | | | |||
| Net assets approach | 30.4 | | NAV1 | | 1x | | +/- 5% | +/- 1.5 | |||
| Total level 3 investments | 62.9 | | | | |
| |||||
1. NAV priced assets include seed capital investments whose value is determined by the fund administrator using unobservable inputs. The significant unobservable inputs applied include EBITDA, market multiples, last observable vendor price and discount rates.
The sensitivity demonstrates the effect of a change in one unobservable input while other assumptions remain unchanged. There may be a correlation between the unobservable inputs and other factors that have not been considered. It should also be noted that some of the sensitivities are non-linear, therefore larger or smaller impacts should not be interpolated or extrapolated from these results.
Financial instruments not measured at fair value
Financial assets and liabilities that are not measured at fair value include cash and cash equivalents, trade and other receivables, and trade and other payables. The carrying value of financial assets and financial liabilities not measured at fair value is considered a reasonable approximation of fair value as at 30 June 2023 and 2022.
20) Seed capital investments
The Group considers itself a sponsor of an investment fund when it facilitates the establishment of a fund in which the Group is the investment manager. The Group ordinarily provides seed capital in order to provide initial scale and facilitate marketing of the funds to third-party investors. Aggregate interests held by the Group include seed capital, management fees and performance fees. The Group generates management and performance fee income from managing the assets on behalf of third-party investors.
The movements of seed capital investments and related items during the year are as follows:
| Group | Financial | Financial | Investment | Other | Third-party | Non-current financial assets measured at | Total |
| Carrying amount at 30 June 2021 | 42.4 | 41.0 | 318.1 | 9.6 | (105.7) | 31.4 | 336.8 |
| Reclassification: | | | | | | | |
| Financial assets held for sale to consolidated funds | (39.1) | - | 40.5 | 0.4 | (1.8) | - | - |
| Consolidated funds to FVTPL | - | 39.1 | (59.5) | 0.1 | 20.3 | - | - |
| Additions | - | 5.5 | - | - | - | 1.9 | 7.4 |
| Disposals | (0.1) | (44.9) | (25.5) | - | 10.2 | (1.5) | (61.8) |
| Fair value movement | (3.2) | (8.4) | (8.5) | 1.0 | 4.0 | 4.7 | (10.4) |
| Carrying amount at 30 June 2022 | - | 32.3 | 265.1 | 11.1 | (73.0) | 36.5 | 272.0 |
| Additions | - | 23.0 | 22.8 | - | (1.4) | 19.5 | 63.9 |
| Disposals | - | - | (23.3) | - | 3.7 | (5.0) | (24.6) |
| Fair value movement | - | 0.5 | (34.7) | (0.5) | 14.5 | 0.4 | (19.8) |
| Carrying amount at 30 June 2023 | - | 55.8 | 229.9 | 10.6 | (56.2) | 51.4 | 291.5 |
1. Investment securities in consolidated funds are measured at FVTPL.
2. Relates to cash and other assets in consolidated funds that are not investment securities, see note 20(c).
3. Excludes £2.7 million of other non-current financial assets measured at fair value that are not classified as seed capital.
a) Financial assets measured at fair value through profit or loss
Where Group companies invest seed capital into funds operated and controlled by the Group and the Group is actively seeking to reduce its investment and it is considered highly probable that it will relinquish control within a year, the interests in the funds are recognised as financial assets and measured at FVTPL.
If the fund remains under the control of the Group for more than one year from the original investment date, it will cease to be classified as a financial asset, and will be consolidated line by line after it is assessed that the Group controls the investment fund in accordance with the requirements of IFRS 10.
Investments cease to be classified as consolidated funds when they are no longer controlled by the Group. A loss of control may happen through sale of the investment and/or dilution of the Group's holding. No such fund was transferred to the FVTPL category during the year (FY2022: three funds with an aggregate value of £39.1 million were transferred to the FVTPL category).
FVTPL investments at 30 June 2023 comprise shares held in debt and equity funds as follows:
| | 2023 | 2022 |
| Equity funds | 29.6 | 15.5 |
| Debt funds | 26.2 | 16.8 |
| Financial assets measured at fair value | 55.8 | 32.3 |
Included within finance income are gains of £2.6 million (FY2022: losses of £12.5 million) on the Group's financial assets measured at FVTPL.
b) Non-current financial assets measured at fair value
Non-current financial asset investments relate to the Group's holding in closed-end funds and are measured at FVTPL.
| | 2023 | 2022 |
| Real estate funds | 0.9 | 1.5 |
| Infrastructure funds | 22.0 | 24.1 |
| Other funds | 28.5 | 10.9 |
| Non-current financial assets measured at fair value1 | 51.4 | 36.5 |
1. Excludes £2.7 million (30 June 2022: £2.8 million) of other non-current financial assets measured at fair value that are not classified as seed capital.
Included within finance income are gains of £1.4 million (FY2022: gains of £4.2 million) on the Group's non-current financial assets measured at fair value.
c) Consolidated funds
The Group has consolidated 17 investment funds as at 30 June 2023 (30 June 2022: 18 investment funds), over which the Group is deemed to have control (refer to note 25). Consolidated funds represent seed capital investments where the Group has held its position for a period greater than one year and its interest represents a controlling stake in the fund in accordance with IFRS 10. Consolidated fund assets and liabilities are presented line by line after intercompany eliminations. The table below sets out an analysis of the carrying amounts of interests held by the Group in consolidated investment funds.
| | 2023 | 2022 |
| Investment securities1 | 229.9 | 265.1 |
| Cash and cash equivalents | 10.3 | 10.0 |
| Other2 | 0.3 | 1.1 |
| Third-party interests in consolidated funds | (56.2) | (73.0) |
| Consolidated seed capital investments | 184.3 | 203.2 |
1. Investment securities represent trading securities held by consolidated investment funds and are measured at FVTPL. Note 25 provides a list of the consolidated funds by asset class, and further detailed information at the security level is available in the individual fund financial statements.
2. Other includes trade receivables, trade payables and accruals.
The maximum exposure to loss is the carrying amount of the assets held. The Group has not provided financial support or otherwise agreed
to be responsible for supporting any consolidated or unconsolidated funds financially.
Included within the consolidated statement of comprehensive income are net losses of £15.3 million (FY2022: net losses of £40.5 million) relating to the Group's share of the results of the individual statements of comprehensive income for each of the consolidated funds, as follows:
| | 2023 | 2022 |
| Investment income | 11.0 | 5.7 |
| Fair value losses on investment securities | (44.3) | (61.3) |
| Change in third-party interests in consolidated funds | 19.3 | 16.5 |
| Audit fees | (0.2) | (0.2) |
| Other expenses | (1.1) | (1.2) |
| Net losses on consolidated funds | (15.3) | (40.5) |
Included in the Group's cash generated from operations is £0.1 million cash utilised in operations (FY2022: £2.8 million cash utilised in operations) relating to consolidated funds.
As of 30 June 2023, the Group's consolidated funds were domiciled in Guernsey, Luxembourg, Saudi Arabia and the United States.
21) Financial instrument risk management
Group
The Group is subject to strategic and business, client, investment, treasury and operational risks throughout its business, as discussed in the Risk management section. This note discusses the Group's exposure to and management of the following principal risks which arise from the financial instruments it uses: credit risk, liquidity risk, interest rate risk, foreign exchange risk and price risk. Where the Group holds units in investment funds, classified either as financial assets measured at FVTPL or non-current financial assets, the related financial instrument risk disclosures in the note below categorise exposures based on the Group's direct interest in those funds without looking through to the nature of underlying securities.
Risk management is the ultimate responsibility of the Board, as noted in the Risk management section.
Capital management
It is the Group's policy that all entities within the Group have sufficient capital to meet regulatory and working capital requirements and it conducts regular reviews of its capital requirements relative to its capital resources.
Ashmore has been reporting under IFPR since 1 January 2022 and applies the ICARA approach to the calculation of the capital and liquidity requirement for its UK regulated entity, AIML.
The Board has determined that the capital required to support the Group's activities, including its regulatory requirements, is £80.6 million. The equivalent figure as at 30 June 2022, calculated under the previous ICAAP approach, was £125.2 million.
Ashmore holds total capital resources of £704.8 million as at 30 June 2023, providing an excess of £624.2 million over the Group capital requirement (30 June 2022: £788.7 million, providing an excess of £663.5 million over the Group capital requirement).
Credit risk
The Group has exposure to credit risk from its normal activities where the risk is that a counterparty will be unable to pay in full amounts when due.
Exposure to credit risk is monitored on an ongoing basis by senior management and the Group's Risk Management and Control function. The Group has a counterparty and cash management policy in place which, in addition to other controls, restricts exposure to any single counterparty by setting exposure limits and requiring approval and diversification of counterparty banks and other financial institutions. The Group's maximum exposure to credit risk is represented by the carrying value of its financial assets measured at amortised cost, excluding prepayments. The table below lists financial assets subject to credit risk.
| | Notes | 2023 | 2022 |
| Trade and other receivables | 17 | 66.0 | 70.8 |
| Cash and cash equivalents | | 478.6 | 552.0 |
| Total | | 544.6 | 622.8 |
The Group's cash and cash equivalents, comprising short-term deposits with banks and liquidity funds, are predominantly held with counterparties with credit ratings ranging from A- to AAAm as at 30 June 2023 (30 June 2022: A to AAAm). As at 30 June 2023, the Group held £56.8 million (30 June 2022: £225.7 million) in the Ashmore Global Liquidity Fund.
All trade and other receivables are considered to be fully recoverable at year end. They include fee debtors that arise principally within the Group's investment management business. They are monitored regularly and, historically, default levels have been insignificant. There is no significant concentration of credit risk in respect of fees owing from clients.
Group
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or other financial assets.
In order to manage liquidity risk, there is a Group liquidity policy to ensure that there is sufficient access to funds to cover all forecast committed requirements for the next 12 months.
The table below summarises the maturity profile of the Group's financial liabilities at 30 June 2023 and 30 June 2022 based on contractual undiscounted payments:
At 30 June 2023
| | Within 1 year | 1-5 years | More than | Total |
| Current trade and other payables | 24.2 | - | - | 24.2 |
| Lease liabilities | 2.4 | 3.9 | - | 6.3 |
| Total | 26.6 | 3.9 | - | 30.5 |
At 30 June 2022
| | Within 1 year | 1-5 years | More than | Total |
| Current trade and other payables | 36.4 | - | - | 36.4 |
| Lease liabilities | 2.6 | 6.0 | 0.2 | 8.8 |
| Total | 39.0 | 6.0 | 0.2 | 45.2 |
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates.
The principal interest rate risk is the risk that the Group will sustain a reduction in interest income through adverse movements in interest rates. This relates to deposits with banks and liquidity funds held in the ordinary course of business. The Group has a cash management policy which monitors cash levels and returns within set parameters on a continuing basis.
Bank and similar deposits (including liquidity funds) held at year end are shown on the consolidated balance sheet as cash and cash equivalents. The effective interest earned on bank and similar deposits during the year is given in the table below:
| | 2023 | 2022 |
| Deposits with banks and liquidity funds | 3.22 | 0.41 |
At 30 June 2023, if interest rates over the year had been 50 basis points higher/lower with all other variables held constant, profit before tax
for the year would have been £2.5 million higher/lower (FY2022: £2.5 million higher/lower), mainly as a result of higher/lower interest on
cash balances. An assumption that the fair value of assets and liabilities will not be affected by a change in interest rates was used in the model to calculate the effect on profit before tax.
In addition, the Group is indirectly exposed to interest rate risk where the Group holds seed capital investments in funds that invest in debt securities.
Foreign exchange risk
Foreign exchange risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in foreign exchange rates.
The Group's revenue is almost entirely denominated in US dollars, while the majority of the Group's costs are denominated in Sterling. Consequently, the Group has an exposure to movements in the GBP:USD exchange rate. In addition, the Group operates globally, which means that it may enter into contracts and other arrangements denominated in local currencies in various countries. The Group also holds a number of seed capital investments denominated mainly in US dollars, Colombian pesos and Indonesian rupiah.
The Group's policy is to hedge a proportion of the Group's revenue by using a combination of forward foreign exchange contracts and options for a period of up to two years forward. The Group also sells US dollars at spot rates when opportunities arise.
The table below shows the Group's sensitivity to a 1% exchange movement in the US dollar, Colombian peso, Indonesian rupiah and the Euro, net of hedging activities.
| | 2023 | 2022 | ||
| Foreign currency sensitivity test | Impact on | Impact on | Impact on | Impact on |
| US dollar +/- 1% | 0.4 | 2.5 | 0.4 | 3.9 |
| Colombian peso +/- 1% | - | 0.2 | 0.1 | 0.2 |
| Indonesian rupiah +/- 1% | - | 0.1 | - | 0.1 |
| Euro +/- 1% | 0.1 | 0.1 | - | - |
Price risk
Price risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of market changes.
Seed capital
The Group is exposed to the risk of changes in market prices in respect of seed capital investments. Such price risk is borne by the Group directly through interests in financial assets measured at fair value or indirectly either through line-by-line consolidation of underlying financial performance and positions held in certain funds. Details of seed capital investments held are given in note 20.
The Group has procedures defined by the Board governing the appraisal, approval and monitoring of seed capital investments.
At 30 June 2023, a 5% movement in the fair value of these investments would have a £14.6 million (FY2022: £13.6 million) impact on net assets and profit before tax.
Management and performance fees
The Group is also indirectly exposed to price risk in connection with the Group's management fees, which are based on a percentage of value of AuM, and fees based on performance. Movements in market prices, exchange and interest rates could cause the AuM to fluctuate, which in turn could affect fees earned. Performance fee revenues could also be reduced depending upon market conditions.
Management and performance fees are diversified across a range of investment themes and are not measurably correlated to any single market index in Emerging Markets. In addition, the policy of having funds with year ends staged throughout the financial year has meant that in periods of steep market decline, some performance fees have still been recorded. The profitability impact is likely to be less than this, as cost mitigation actions would apply, including the reduction of the variable compensation paid to employees.
Using the year end AuM level of US$55.9 billion and applying the year's average net management fee rate of 38bps, a 5% movement in AuM would have a US$10.6 million impact, equivalent to £8.3 million using a year end exchange rate of 1.2714, on management fee revenues (FY2022: US$64.0 billion and applying the year's average net management fee rate of 39bps, a 5% movement in AuM would have a US$12.5 million impact, equivalent to £10.3 million using a year end exchange rate of 1.2145, on management fee revenues).
Hedging activities
The Group uses forward and option contracts to hedge its exposure to foreign currency risk. These hedges, which have been assessed as effective cash flow hedges as at 30 June 2023, protect a proportion of the Group's revenue cash flows from foreign exchange movements. The cumulative fair value of the outstanding foreign exchange hedges asset at 30 June 2023 was £0.2 million and is included within the Group's derivative financial instruments (30 June 2022: £5.2 million foreign exchange hedges liability included in derivative financial instruments).
Group
The notional and fair values of foreign exchange hedging instruments were as follows:
| | 2023 | 2022 | ||
| | Notional | Fair value | Notional | Fair value |
| Cash flow hedges | | | | |
| Foreign exchange nil-cost option collars | 40.0 | 0.2 | 100.0 | (5.2) |
| | 40.0 | 0.2 | 100.0 | (5.2) |
The maturity profile of the Group's outstanding hedges is shown below.
| Notional amount of option collars maturing: | 2023 | 2022 |
| Within 6 months | 30.0 | 40.0 |
| Between 6 and 12 months | 10.0 | 40.0 |
| Later than 12 months | - | 20.0 |
| | 40.0 | 100.0 |
When hedges are assessed as effective, intrinsic value gains and losses are initially recognised in other comprehensive income and later reclassified to comprehensive income as the corresponding hedged cash flows crystallise. Time value in relation to the Group's hedges is excluded from being part of the hedging item and, as a result, the net unrealised loss related to the time value of the hedges is recognised in the consolidated statement of comprehensive income for the year.
An intrinsic value gain of £4.9 million (FY2022: £6.0 million loss) on the Group's hedges has been recognised through other comprehensive income and a £0.5 million intrinsic value gain (FY2022: £0.5 million intrinsic value loss) was reclassified from equity to the statement of comprehensive income in the year.
Included within the net realised and unrealised hedging gain of £4.4 million (note 7) recognised at 30 June 2023 (30 June 2022: £6.3 million gain) are:
- a £0.5 million gain in respect of foreign exchange hedges covering net management fee income for the financial year ending 30 June 2023 (FY2022: £0.5 million loss); and
- a £3.9 million gain in respect of crystallised foreign exchange contracts (FY2022: £6.8 million gain).
Company
The risk management processes of the Company, including those relating to the specific risk exposures covered below, are aligned with those of the Group as a whole unless stated otherwise.
In addition, the risk definitions that apply to the Group are also relevant for the Company.
Credit risk
The Company's maximum exposure to credit risk is represented by the carrying value of its financial assets measured at amortised cost, excluding prepayments. The table below lists financial assets subject to credit risk.
| | Notes | 2023 | 2022 |
| Cash and cash equivalents | | 327.7 | 159.7 |
| Trade and other receivables | 17 | 282.5 | 454.8 |
| Total | | 610.2 | 614.5 |
The Company's cash and cash equivalents comprise short-term deposits held with banks and liquidity funds which have credit ratings ranging from A- to AAAm as at 30 June 2023 (30 June 2022: A to AAAm).
All trade and other receivables are considered to be fully recoverable and none were overdue at year end (30 June 2022: none overdue).
Liquidity risk
The Company's exposure to liquidity risk is not considered to be material and, therefore, no further information is provided.
Details on other commitments are provided in note 29.
Company
Interest rate risk
The principal interest rate risk for the Company is that it could sustain a reduction in interest revenue from bank deposits held in the ordinary course of business through adverse movements in interest rates.
Bank and similar deposits (including liquidity funds) held at year end are shown on the Company's balance sheet as cash and cash equivalents. The effective interest earned on bank and similar deposits during the year is given in the table below:
| | 2023 | 2022 |
| Deposits with banks and liquidity funds | 4.17 | 0.46 |
At 30 June 2023, if interest rates over the year had been 50 basis points higher/lower with all other variables held constant, post-tax profit for the year would have been £1.2 million higher/lower (FY2022: £0.6 million higher/lower), mainly as a result of higher/lower interest on cash balances. An assumption that the fair value of assets and liabilities will not be affected by a change in interest rates was used in the model to calculate the effect on post-tax profits.
Foreign exchange risk
The Company is exposed primarily to foreign exchange risk in respect of US dollar cash balances and US dollar-denominated intercompany balances. However, such risk is not hedged by the Company.
At 30 June 2023, if the US dollar had strengthened/weakened by 1% against Sterling with all other variables held constant, profit before tax for the year would have increased/decreased by £2.4 million (FY2022: increased/decreased by £3.6 million).
22) Share capital
Authorised share capital
| Group and Company | 2023 | 2023 | 2022 | 2022 |
| Ordinary shares of 0.01p each | 900,000,000 | 90 | 900,000,000 | 90 |
Issued share capital - allotted and fully paid
| Group and Company | 2023 | 2023 | 2022 | 2022 |
| Ordinary shares of 0.01p each | 712,740,804 | 71 | 712,740,804 | 71 |
All the above ordinary shares represent equity of the Company and rank pari passu in respect of participation and voting rights.
At 30 June 2023, there were equity-settled share awards issued under the Omnibus Plan totalling 39,389,867 (30 June 2022: 40,688,833) shares that have release dates ranging from July 2023 to September 2027. Further details are provided in note 10.
23) Own shares
The Trustees of the Ashmore 2004 Employee Benefit Trust (EBT) acquire and hold shares in Ashmore Group plc with a view to facilitating the vesting of share awards. As at 30 June 2023, the EBT owned 50,834,683 (30 June 2022: 55,512,301) ordinary shares of 0.01p with a nominal value of £5,083 (30 June 2022: £5,551) and shareholders' funds are reduced by £164.2 million (30 June 2022: £187.6 million) in this respect. The EBT is periodically funded by the Company for these purposes.
24) Trade and other payables
| | Group | Group | Company | Company |
| Current | | | | |
| Trade payables | 13.3 | 15.8 | 3.0 | 2.4 |
| Accruals and provisions | 10.9 | 20.6 | 4.5 | 11.4 |
| Amounts due to subsidiaries | - | - | 20.5 | 29.7 |
| Total trade and other payables | 24.2 | 36.4 | 28.0 | 43.5 |
25) Interests in subsidiaries
Operating subsidiaries held by the Company
There were no movements in investments in subsidiaries held by the Company during the year.
| Company | 2023 | 2022 |
| Cost | | |
| At 30 June 2023 and 2022 | 19.9 | 19.9 |
In the opinion of the Directors, the following subsidiary undertakings principally affected the Group's results or financial position at 30 June 2023. A full list of the Group's subsidiaries and all related undertakings is disclosed in note 33.
| Name | Country of incorporation/ formation and principal place of operation | % of equity shares held |
| Ashmore Investments (UK) Limited | England | 100.00 |
| Ashmore Investment Management Limited | England | 100.00 |
| Ashmore Investment Advisors Limited | England | 100.00 |
| Ashmore Management Company Colombia SAS | Colombia | 59.26 |
| Ashmore CAF-AM Management Company SAS | Colombia | 53.09 |
| Ashmore Avenida Investments (Real Estate) LLP | Colombia | 56.00 |
| Ashmore Management Company Limited | Guernsey | 100.00 |
| Ashmore Investment Management India LLP | India | 100.00 |
| PT Ashmore Asset Management Indonesia Tbk | Indonesia | 60.04 |
| Ashmore Investment Management (Ireland) Limited | Ireland | 100.00 |
| Ashmore Japan Co. Limited | Japan | 100.00 |
| Ashmore Investments (Holdings) Limited | Mauritius | 100.00 |
| Ashmore Investments Saudi Arabia | Saudi Arabia | 100.00 |
| Ashmore Investment Management (Singapore) Pte. Ltd. | Singapore | 100.00 |
| Ashmore Investment Management (US) Corporation | USA | 100.00 |
| Ashmore Investment Advisors (US) Corporation | USA | 100.00 |
Consolidated funds
The Group consolidated the following 17 investment funds as at 30 June 2023 (30 June 2022: 18 investment funds) over which the Group is deemed to have control:
| Name | Type of fund | Country of incorporation/ principal place of operation | % of net |
| Ashmore Emerging Markets Debt and Currency Fund Limited | Alternatives | Guernsey | 57.72 |
| Ashmore SICAV Emerging Markets Corporate Debt ESG Fund | Corporate debt | Luxembourg | 100.00 |
| Ashmore SICAV Emerging Markets Equity ESG Fund | Equity | Luxembourg | 99.36 |
| Ashmore SICAV Emerging Markets Indonesian Equity Fund | Equity | Luxembourg | 100.00 |
| Ashmore SICAV Emerging Markets Global Small-Cap Equity Fund | Equity | Luxembourg | 47.55 |
| Ashmore SICAV Emerging Markets Middle East Equity Fund | Equity | Luxembourg | 88.78 |
| Ashmore SICAV Emerging Markets IG Total Return Fund | Blended debt | Luxembourg | 100.00 |
| Ashmore SICAV Emerging Markets Total Return ESG Fund | Blended debt | Luxembourg | 99.77 |
| Ashmore SICAV Emerging Markets Sovereign Debt ESG Fund | External debt | Luxembourg | 100.00 |
| Ashmore SICAV Emerging Markets China Bond Fund | Local currency | Luxembourg | 100.00 |
| Ashmore Saudi Equity Fund | Equity | Saudi Arabia | 69.29 |
| Ashmore Emerging Markets Active Equity Fund | Equity | USA | 73.14 |
| Ashmore Emerging Markets Equity ESG Fund | Equity | USA | 100.00 |
| Ashmore Emerging Markets Short Duration Select Fund | Equity | USA | 100.00 |
| Ashmore Emerging Markets Investment Grade Income Fund | Corporate debt | USA | 100.00 |
| Ashmore Emerging Markets Corporate Debt ESG Fund | Corporate debt | USA | 100.00 |
| Ashmore Emerging Markets Local Currency Bond Fund | Local currency | USA | 78.91 |
26) Investment in associates
The Group held an interest in the following associate as at 30 June 2023, over which it continues to have significant influence:
| Name | Type | Nature of business | Country of incorporation/ | % of equity shares held by the Group |
| Taiping Fund Management Company | Associate | Investment management | China | 5.23% |
The movement in the carrying value of investments in associates for the year is provided below:
| Associates | 2023 | 2022 |
| At the beginning of the year | 2.1 | 0.9 |
| Reclassification | - | (0.2) |
| Gain on dilution | - | 1.3 |
| Share of profit for the year | 0.5 | - |
| Foreign exchange revaluation | (0.3) | 0.1 |
| At the end of the year | 2.3 | 2.1 |
The summarised financial information for the associate is shown below.
| Associates | 2023 | 2022 |
| Total assets | 53.2 | 54.5 |
| Total liabilities | (10.0) | (13.3) |
| Net assets | 43.2 | 41.2 |
| Group's share of net assets | 2.3 | 2.1 |
| Revenue for the year | 23.6 | 23.5 |
| Profit for the year | 9.6 | 0.8 |
| Group's share of profit for the year | 0.5 | - |
The carrying value of the investments in associates represents the cost of acquisition subsequently adjusted for share of profit or loss
and other comprehensive income or loss. No permanent impairment is believed to exist relating to the associate as at 30 June 2023. The Group had no undrawn capital commitments (30 June 2022: £nil) to investment funds managed by the associate.
27) Interests in structured entities
The Group has interests in structured entities as a result of the management of assets on behalf of its clients. Where the Group holds a direct interest in a closed-ended fund, private equity fund or open-ended pooled fund such as a SICAV, the interest is accounted for either as a consolidated structured entity or as a financial asset, depending on whether the Group has control over the fund or not.
The Group's interest in structured entities is reflected in the Group's AuM. The Group is exposed to movements in AuM of structured entities through the potential loss of fee income as a result of client withdrawals. Outflows from funds are dependent on market sentiment, asset performance and investor considerations. Further information on these risks can be found in the Strategic report.
Considering the potential for changes in AuM of structured entities, management has determined that the Group's unconsolidated structured entities include segregated mandates and pooled funds vehicles. Disclosure of the Group's exposure to unconsolidated structured entities has been made on this basis.
The reconciliation of AuM reported by the Group within unconsolidated structured entities is shown below.
| | Total AuM | Less: | AuM within |
| 30 June 2022 | 64.0 | 0.3 | 63.7 |
| 30 June 2023 | 55.9 | 0.3 | 55.6 |
Included in the Group's consolidated management fees of £185.4 million (FY2022: £247.0 million) are management fees amounting to £184.2 million (FY2022: £246.0 million) earned from unconsolidated structured entities.
The table below shows the carrying values of the Group's interests in unconsolidated structured entities, recognised in the Group balance sheet, which are equal to the Group's maximum exposure to loss from those interests.
| | 2023 | 2022 |
| Management fees receivable | 37.7 | 47.6 |
| Trade and other receivables | 1.3 | 0.8 |
| Seed capital investments* | 107.2 | 68.8 |
| Total exposure | 146.2 | 117.2 |
* Comprise financial assets measured at fair value and non-current financial assets measured at fair value (refer to note 20).
The main risk the Group faces from its beneficial interests in unconsolidated structured entities arises from a potential decrease in the fair value of seed capital investments. The Group's beneficial interests in seed capital investments are disclosed in note 20. Note 21 includes further information on the Group's exposure to market risk arising from seed capital investments.
28) Related party transactions
Related parties of the Group include key management personnel, close family members of key management personnel, subsidiaries, associates, joint ventures, Ashmore funds, the EBT and The Ashmore Foundation.
Key management personnel - Group and Company
The compensation paid to or payable to key management personnel is shown below:
| | 2023 | 2022 |
| Short-term benefits | 0.8 | 0.8 |
| Defined contribution pension costs | - | - |
| Share-based payment benefits (note 10) | 0.4 | 0.2 |
| | 1.2 | 1.0 |
Short-term benefits include salary and fees, benefits and cash bonus.
Share-based payment benefits represent the cost of equity-settled awards charged to the statement of comprehensive income.
Details of the remuneration of Directors are given in the Remuneration report.
During the year, there were no other transactions entered into with key management personnel (FY2022: none). Aggregate key management personnel interests in consolidated funds at 30 June 2023 were £44.5 million (30 June 2022: £62.7 million).
Transactions with subsidiaries - Company
Details of transactions between the Company and its subsidiaries are shown below:
| | 2023 | 2022 |
| Transactions during the year | | |
| Management fees | 59.7 | 67.2 |
| Net dividends | 145.2 | 174.0 |
| Loans repaid by subsidiaries | 110.5 | 183.8 |
Amounts receivable or payable to subsidiaries are disclosed in notes 17 and 24 respectively.
Transactions with Ashmore funds - Group
During the year, the Group received £64.0 million of gross management fees and performance fees (FY2022: £96.2 million) from the 104 funds (FY2022: 99 funds) it manages and which are classified as related parties. As at 30 June 2023, the Group had receivables due from funds of £4.6 million (30 June 2022: £5.8 million) that are classified as related parties.
Transactions with the EBT - Group and Company
The EBT has been provided with a loan facility to allow it to acquire Ashmore shares in order to satisfy outstanding unvested share awards. The EBT is included within the results of the Group and the Company. As at 30 June 2023, the loan outstanding was £150.7 million (30 June 2022: £163.7 million).
Transactions with The Ashmore Foundation - Group and Company
The Ashmore Foundation is a related party to the Group. The Foundation was set up to provide financial grants to worthwhile causes within the Emerging Markets countries in which Ashmore invests and/or operates with a view to giving back to the countries and communities. The Group donated £0.5 million to the Foundation during the year (FY2022: £0.6 million).
29) Commitments
The Group has undrawn investment commitments relating to seed capital investments as follows:
| Group | 2023 | 2022 |
| Ashmore Andean Fund II, LP | 0.1 | 0.1 |
| Ashmore Avenida Colombia Real Estate Fund I (Cayman) LP | 0.1 | 0.1 |
| Ashmore I - CAF Colombian Infrastructure Senior Debt Fund | 5.7 | 6.6 |
| Fondo Ashmore Andino III - FCP | 3.0 | - |
| Ashmore KCH HealthCare Fund II | - | 1.2 |
| Ashmore KCH HealthCare LLC | - | 4.4 |
| Total undrawn investment commitments | 8.9 | 12.4 |
Company
The Company has undrawn loan commitments to other Group entities totalling £482.5 million (30 June 2022: £394.1 million) to support their investment activities but has no investment commitments of its own (30 June 2022: none).
30) Contingent assets and liabilities
The Company and its subsidiaries can be party to legal claims arising in the normal course of business. The Directors do not anticipate that the outcome of any such potential proceedings and claims will have a material adverse effect on the Group's financial position and at present there are no such claims where their financial impact can be reasonably estimated. There are no other material contingent assets or liabilities.
31) Non-controlling interests
The Group's material NCI as at 30 June 2023 was held in PT Ashmore Asset Management Indonesia Tbk (Ashmore Indonesia). Set out below is summarised financial information and the amounts disclosed are before intercompany eliminations.
| | 40% NCI | |
| Summarised balance sheet | 2023 | 2022 |
| Total assets | 19.8 | 23.0 |
| Total liabilities | (4.4) | (6.4) |
| Net assets | 15.4 | 16.6 |
| Non-controlling interests* | 6.1 | 13.6 |
| | | |
| Summarised statement of comprehensive income | | |
| Net revenue | 10.9 | 12.3 |
| Profit for the period | 5.1 | 5.9 |
| Other comprehensive income/(loss) | (0.9) | 1.6 |
| Total comprehensive income | 4.2 | 7.5 |
| Profit allocated to NCI | 1.6 | 3.0 |
| Dividends paid to NCI | 2.3 | 2.3 |
| | | |
| Summarised cash flows | | |
| Cash flows from operating activities | 4.6 | 6.5 |
| Cash flows used in investing activities | - | (3.6) |
| Cash flows used in financing activities | (6.3) | (6.3) |
| Net decrease in cash and cash equivalents | (1.7) | (3.4) |
* £6.8 million of historical NCI was reclassified to retained earnings in the year.
32) Post-balance sheet events
There are no post-balance sheet events that require adjustment or disclosure in the Group consolidated financial statements.
33) Subsidiaries and related undertakings
The following is a full list of the Ashmore Group plc subsidiaries and related undertakings as at 30 June 2023, along with the registered address and the percentage of equity owned by the Group. Related undertakings comprise significant holdings in associated undertakings, joint ventures and Ashmore sponsored public funds in which the Group owns greater than 20% interest.
| Name | Classification | % voting interest | Registered address and place of incorporation |
| Ashmore Investments (UK) Limited1 | Subsidiary | 100.00 | 61 Aldwych, London WC2B 4AE United Kingdom |
| Ashmore Investment Management Limited | Subsidiary | 100.00 | |
| Ashmore Investment Advisors Limited | Subsidiary | 100.00 | |
| Aldwych Administration Services Limited (dormant) | Subsidiary | 100.00 | |
| Ashmore Asset Management Limited (dormant) | Subsidiary | 100.00 | |
| Ashmore Avenida Investments (Real Estate) LLP | Subsidiary | 56.00 | |
| Ashmore Avenida Devco Holding Company Limited2 | Subsidiary | 100.00 | |
| Ashmore Investment Management (Ireland) Limited | Subsidiary | 100.00 | 32 Molesworth Street, Dublin 2, D02 Y512 |
| Ashmore Investment Management India LLP | Subsidiary | 100.00 | 507A Kakad Chambers, Dr Annie Besant Road Worli, Mumbai 400 018, India |
| Ashmore Investment Management (US) Corporation | Subsidiary | 100.00 | The Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, USA |
| Ashmore Investment Advisors (US) Corporation | Subsidiary | 100.00 | |
| Avenida Partners LLC | Subsidiary | 100.00 | 200 Park Avenue South New York, 10003 USA |
| Avenida CREF I Manager Cayman LLC | Subsidiary | 100.00 | |
| Avenida CREF I Manager LLC | Subsidiary | 100.00 | |
| Avenida A2 Partners LLC | Subsidiary | 100.00 | |
| Avenida Colombia Member LLC | Subsidiary | 83.30 | |
| Avenida CREF II Partners LLC | Subsidiary | 100.00 | |
| Avenida CREF II GP LLC | Subsidiary | 100.00 | |
| MCA Partners LLC | Subsidiary | 100.00 |
1. Ashmore Investments (UK) Limited (registered number 3345198) is exempt from the requirements relating to the audit of accounts under section 479A of the UK Companies Act 2006.
2. Ashmore Avenida Devco Holding Company Limited is under an active proposal to strike off.
| Name | Classification | % voting interest | Registered address and place of incorporation |
| Avenida REF Holding SA | Subsidiary | 100.00 | Yamandu 1321, 11500 |
| Avenida CREF II Manager SRL | Subsidiary | 99.99 | |
| Avenida CREF Partners SRL | Subsidiary | 99.99 | |
| Avenida CREF II GP SRL | Subsidiary | 85.09 | |
| Ashmore Avenida LatAm Energy Efficient Affordable Housing Fund III GP | Subsidiary | 100.00 | 10 rue du Château d'Eau, L-3364 Leudelange, Grand Duchy of Luxembourg |
| Ashmore Investment Management (Singapore) Pte. Ltd. | Subsidiary | 100.00 | 1 George Street, #15-04, Singapore 049145 |
| KCH Cairo Pte. Ltd (dormant) | Subsidiary | 100.00 | |
| KCH Cairo S.A.E. (dormant) | Subsidiary | 99.20 | Zone (T) - Emaar, Up Town Cairo, Mokattam, Cairo, Egypt |
| PT Ashmore Asset Management Indonesia Tbk | Subsidiary | 60.04 | Pacific Century Place, 18th Floor, |
| Ashmore Dana Pasar Uang Syariah | Financial asset | 100.00 | |
| Ashmore Dana USD Fixed Income | Financial asset | 39.42 | |
| Ashmore Management Company Colombia SAS | Subsidiary | 59.26 | Carrera 7 No. 75-66, Office 701 & 702 Bogotá, Colombia |
| Ashmore-CAF-AM Management Company SAS | Subsidiary | 53.09 | |
| Ashmore Holdings Colombia SAS | Subsidiary | 100.00 | |
| Ashmore Investment Advisors S.A. Sociedad Fiduciaria | Subsidiary | 100.00 | |
| Ashmore Backup Management Company SAS | Subsidiary | 100.00 | |
| Avenida Colombia Management Company SAS | Subsidiary | 100.00 | |
| Ashmore Avenida DP General Partner SAS | Subsidiary | 80.00 | |
| Ashmore Avenida Back Office SAS | Subsidiary | 100.00 | |
| Ashmore Peru Backup Management | Subsidiary | 100.00 | Av. Circunvalación del Club Golf Los Incas No. 134, Torre 1, Of. 505, Surco. Lima, Perú |
| Ashmore Japan Co. Limited | Subsidiary | 100.00 | 11F, Shin Marunouchi Building 1-5-1 Marunouchi Chiyoda-ku Tokyo Japan 100-6511 |
| Ashmore Investments (Colombia) SL | Subsidiary | 100.00 | c/o Hermosilla 11, 4ºA, 28001 Madrid, Spain |
| Ashmore Management (DIFC) Limited | Subsidiary | 100.00 | Unit L30-07, Level 30, ICD Brookfield Place, Dubai International Financial Centre, Dubai, UAE |
| Ashmore Investment Saudi Arabia | Subsidiary | 100.00 | 3rd Floor Tower B, Olaya Towers Olaya Main Street, Riyadh, Saudi Arabia |
| Ashmore Saudi Equity Fund | Consolidated fund | 69.29 | |
| Ashmore AISA (Cayman) Limited | Subsidiary | 100.00 | PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands |
| AA Development Capital Investment Managers | Subsidiary | 55.00 | Les Cascades Building 33 Edith Cavell Street, Port Louis Mauritius |
| Ashmore Investments (Holdings) Limited | Subsidiary | 100.00 |
| Name | Classification | % voting interest | Registered address and place of incorporation |
| Ashmore Management Company Limited | Subsidiary | 100.00 | Trafalgar Court |
| Ashmore Global Special Situations Fund 3 (GP) Limited | Subsidiary | 100.00 | |
| Ashmore Global Special Situations Fund 4 (GP) Limited | Subsidiary | 100.00 | |
| Ashmore Global Special Situations Fund 5 (GP) Limited | Subsidiary | 100.00 | |
| Ashmore Venezuela Recovery Fund 2 Ltd | Financial asset | 45.85 | |
| Ashmore Emerging Markets Debt and Currency Fund Limited | Consolidated fund | 57.72 | |
| Ashmore SICAV Emerging Markets Middle East Equity Fund | Consolidated fund | 88.78 | 10, rue du Chateau d'Eau |
| Ashmore SICAV Emerging Markets Sovereign Debt ESG Fund | Consolidated fund | 100.00 | |
| Ashmore SICAV Emerging Markets Corporate Debt ESG Fund | Consolidated fund | 100.00 | |
| Ashmore SICAV Emerging Markets China Bond Fund | Consolidated fund | 100.00 | |
| Ashmore SICAV Emerging Markets Global Small-Cap Equity Fund | Consolidated fund | 47.55 | |
| Ashmore SICAV Emerging Markets IG Total Return Fund | Consolidated fund | 100.00 | |
| Ashmore SICAV Emerging Markets Total Return ESG Fund | Consolidated fund | 99.77 | |
| Ashmore SICAV Emerging Markets Indonesian Equity Fund | Consolidated fund | 100.00 | |
| Ashmore SICAV Emerging Markets Equity ESG Fund | Consolidated fund | 99.36 | |
| Ashmore SICAV Emerging Markets Local Currency Bond Fund 2 | Consolidated fund | 100.00 | |
| Ashmore SICAV Emerging Markets Shariah Active Equity Fund | Financial asset | 100.00 | |
| Ashmore SICAV Emerging Markets IG Short Duration Fund | Financial asset | 30.01 | |
| Ashmore SICAV Emerging Markets Multi-Asset Fund | Financial asset | 28.46 | |
| Ashmore Emerging Markets Corporate Debt ESG Fund | Consolidated fund | 100.00 | 50 South LaSalle Street |
| Ashmore Emerging Markets Investment Grade Income Fund | Consolidated fund | 100.00 | |
| Ashmore Emerging Markets Active Equity Fund | Consolidated fund | 73.14 | |
| Ashmore Emerging Markets Local Currency Bond Fund | Consolidated fund | 78.91 | |
| Ashmore Emerging Markets Equity ESG Fund | Consolidated fund | 100.00 | |
| Ashmore Emerging Markets Short Duration Select Fund | Consolidated fund | 100.00 |
Cautionary statement regarding forward-looking statements
It is possible that this document could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning.
Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are several factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. The Group undertakes no obligation to revise or update any forward-looking statements contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise.
Statutory accounts
The financial information set out above does not constitute the Group's statutory accounts for the years ending 30 June 2023 or 30 June 2022. Statutory accounts for 2022 have been delivered to the registrar of companies, and those for 2023 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 in respect of the accounts for 2022 or 2023.
Alternative Performance Measures
Ashmore discloses APMs in order to assist shareholders' understanding of the Group's operational performance during the accounting period and to allow consistent comparisons with prior periods.
The calculation of APMs is consistent with the financial year ended 30 June 2022. Historical disclosures relating to APMs, including explanations and reconciliations, can be found in the respective interim financial reports and Annual Reports and Accounts.
Net revenue
As shown in the CSCI, net revenue is total revenue less distribution costs and including FX. This provides a comprehensive view of the revenues recognised by the Group in the period.
| | Reference | FY2023 | FY2022 |
| Total revenue | CSCI | 193.2 | 254.4 |
| Less: | | | |
| Distribution costs | CSCI | (2.2) | (3.5) |
| Add: | | | |
| Foreign exchange | CSCI | 5.4 | 11.6 |
| Net revenue | | 196.4 | 262.5 |
Net management fees
The principal component of the Group's revenues is management fees, net of associated distribution costs, earned on AuM.
| | Reference | FY2023 | FY2022 |
| Management fees | CSCI | 185.4 | 247.0 |
| Less: | | | |
| Distribution costs | CSCI | (2.2) | (3.5) |
| Net management fees | | 183.2 | 243.5 |
Net management fee margin
The net management fee margin is defined as the ratio of annualised management fees less distribution costs to average AuM for the period, in US dollars since it is the primary currency in which fees are received and matches the Group's AuM disclosures. The average AuM excludes assets where fees are not recognised in revenues, for example AuM related to associates or joint ventures. The margin is a principal measure of the firm's revenue generating capability and is a commonly used industry performance measure.
| | | FY2023 | FY2022 |
| Net management fee income (US$m) | | 220.6 | 323.4 |
| Average AuM (US$bn) | | 57.7 | 82.8 |
| Net management fee margin (bps) | | 38 | 39 |
Variable compensation ratio
The variable compensation ratio is defined as the charge for VC as a proportion of EBVCIT. The linking of variable annual pay awards to the Group's profitability is one of the principal methods by which the Group controls its operating costs. The charge for VC is a component of personnel expenses and comprises share-based payments and performance-related cash bonuses.
EBVCIT is operating profit excluding the charge for VC, charitable donations and seed capital-related items. The latter comprises gains/losses on investment securities, change in third-party interests in consolidated funds, and other expenses in respect of consolidated funds.
| | Reference | FY2023 | FY2022 |
| Operating profit | CSCI | 77.4 | 119.2 |
| Less: | | | |
| Seed capital-related items | CSCI, Note 20c | 26.3 | 46.2 |
| Add: | | | |
| Variable remuneration | Note 9 | 34.8 | 45.6 |
| Charitable donations | | 0.5 | 0.6 |
| EBVCIT | | 139.0 | 211.6 |
| VC ratio | | 25.0% | 21.5% |
EBITDA
EBITDA provides a view of the operating performance of the business before certain non-cash items, financing income and charges, and taxation.
| | Reference | FY2023 | FY2022 |
| Operating profit | CSCI | 77.4 | 119.2 |
| Add: | | | |
| Depreciation and amortisation | Note 11 | 3.2 | 3.1 |
| EBITDA | | 80.6 | 122.3 |
Adjusted net revenue, adjusted operating costs and adjusted EBITDA
Adjusted figures exclude items relating to FX translation and seed capital. This provides an alternative view of performance, excluding the volatility associated with those items, which is used by management to assess the Group's operating performance.
| | Reference | FY2023 | FY2022 |
| Net revenue | CSCI | 196.4 | 262.5 |
| Less: | | | |
| FX translation | Note 7 | (1.0) | (5.3) |
| Adjusted net revenue | | 195.4 | 257.2 |
| | | | |
| | Reference | FY2023 | FY2022 |
| Personnel expenses | CSCI | (66.2) | (73.4) |
| Other expenses | CSCI | (27.8) | (25.1) |
| Less: | | | |
| Other expenses in consolidated funds | Note 20c | 1.3 | 1.4 |
| Add: | | | |
| VC % on FX translation | Note 7 | 0.3 | 1.1 |
| Adjusted operating costs | | (92.4) | (96.0) |
| | | | |
| | Reference | FY2023 | FY2022 |
| EBITDA | | 80.6 | 122.3 |
| Less: | | | |
| FX translation | Note 7 | (1.0) | (5.3) |
| VC % on FX translation | Note 7 | 0.3 | 1.1 |
| Seed capital-related items | CSCI, Note 20c | 26.3 | 46.2 |
| Adjusted EBITDA | | 106.2 | 164.3 |
Adjusted EBITDA margin
The ratio of adjusted EBITDA to adjusted net revenue. This is an appropriate measure of the Group's operational efficiency and its ability to generate returns for shareholders.
Adjusted diluted EPS
Diluted EPS excluding items relating to FX translation and seed capital, as described above, and the related tax impact.
| | Reference | FY2023 | FY2022 |
| Diluted EPS | CSCI | 12.2 | 12.6 |
| Less: | | | |
| FX translation | Note 7 | (0.1) | (0.6) |
| Tax on FX translation | | - | 0.1 |
| Seed capital-related items | CSCI, Note 8, Note 20c | 1.2 | 7.1 |
| Tax on seed capital-related items | | (0.6) | (0.5) |
| Adjusted diluted EPS | | 12.7 | 18.7 |
Conversion of operating profits to cash
This compares cash generated from operations, excluding consolidated funds, to adjusted EBITDA, and is a measure of the effectiveness of the Group's operations in converting profits to cash flows for shareholders. Excluding consolidated funds also ensures consistency between the cash flow and adjusted EBITDA.
| | Reference | FY2023 | FY2022 |
| Cash generated from operations | Consolidated cash flow statement | 111.6 | 182.1 |
| Less: | | | |
| Cash flows relating to consolidated funds | Note 20c | 0.1 | 2.8 |
| Operating cash flow | | 111.7 | 184.9 |
| Adjusted EBITDA | | 106.2 | 164.3 |
| Conversion of operating profits to cash | | 105% | 113% |
Capital resources
Ashmore has calculated its capital resources in a manner consistent with the IFPR. Note that goodwill and intangible assets include associated deferred tax liabilities and deferred acquisition costs, and foreseeable dividends relate to the proposed final dividend of 12.1 pence per share. Other adjustments relate to the cash flow hedging reserve.
| | Reference | 30 June 2023 | 30 June 2022 |
| Total equity | Balance sheet | 898.8 | 945.0 |
| Less: | | | |
| Goodwill and intangibles | n/a | (80.0) | (84.4) |
| Deferred tax assets | Balance sheet | (23.9) | (32.7) |
| Foreseeable dividends | Note 14 | (85.1) | (84.7) |
| Investments in financial sector entities | n/a | (5.0) | (4.9) |
| Other adjustments | Consolidated statement of changes in equity | - | 4.9 |
| Capital resources | | 704.8 | 743.2 |
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