Ashmore increases its 2015 interim dividend by 2.2%

DividendMax Ltd.

Ashmore increases its 2015 interim dividend by 2.2%

Highlights

Assets under management (AuM) at 31 December 2014 of US$63.7 billion (30 June 2014: US$75.0 billion)

56% of AuM outperforming benchmarks over three years with attractive near-term return opportunities

Net revenues increased 22% to £164.0 million (H1 2013/14: £134.6 million)

- net management fees of £133.0 million (H1 2013/14: £149.8 million), 11% lower following 8% decline in average AuM

- performance fees of £7.0 million (H1 2013/14: £0.7 million)

- benefits of stronger US dollar generated foreign exchange gains of £21.4 million (H1 2013/14: £18.5 million loss)

Business model continues to deliver high adjusted EBITDA margin of 67% (H1 2013/14: 67%)

- adjusted EBITDA, excluding seed capital and foreign exchange translation, of £96.3 million (-7% YoY)

- continued cost discipline with operating costs excluding variable remuneration reduced by 4% YoY

Strong cash generation from operations of £95.1 million

Statutory profit before tax increased 37% to £110.7 million (H1 2013/14: £80.8 million)

Diluted earnings per share increased 28% to 11.5p (H1 2013/14: 9.0 p)

- foreign exchange translation effects increased diluted EPS by approximately 2p

An interim dividend of 4.55p per share to be paid on 10 April 2015 (H1 2013/14: 4.45p)

Commenting on the results, Mark Coombs, Chief Executive Officer of Ashmore Group plc, said:

"Ashmore's profit before tax improved by 37% to £110.7 million, despite challenging market conditions that led to an 8% decline in average AuM. This was achieved through rigorous control of operating costs, higher performance fees, and the benefits of a stronger US dollar that offset the decline in management fee income.

"Sentiment towards the Emerging Markets asset class is being dictated by macro factors to the exclusion of country or company-specific fundamentals. While this has had a short-term impact on asset prices and hence performance, particularly in the last quarter, it provides a favourable backdrop for Ashmore's value-based investment processes to establish positions in order to enhance returns over the longer-term. Indeed, Emerging Markets offer substantial absolute and relative value with fixed income spreads wider than at any time since the onset of the global financial crisis, and appreciable real yield differentials compared with Developed Markets. Emerging Markets equities continue to offer attractive value given they trade at a substantial discount to Developed Markets on a forward price/earnings basis.

"In 2015, we expect Emerging Markets to continue to pursue beneficial reforms, make cyclical adjustments, and sustain flexibility in policy making, made possible due to their attractive growth profiles and distinct advantages over Developed Markets in that indebtedness and inflation are both at favourable levels. While US monetary tightening is perceived to be a headwind, markets have had nearly two years to adjust to the prospect and Emerging Markets asset prices reflect higher US rate expectations than are likely to be achieved this year. Furthermore, continued loose monetary policy in Japan and the ECB's decision to undertake quantitative easing over the next 18 months are expected to support assets with attractive yields.

"After a period of volatile asset prices but resilience in economic and political fundamentals, Emerging Markets offer attractive near-term returns. Ashmore has experienced and acted upon such value opportunities for clients in the past, and is well-equipped to do so again in this cycle."

Companies mentioned