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Emerging markets-focused asset manager Ashmore Group (LSE:ASHM) Apresented a relatively strong set of final results on Thursday, despite facing challenges related to assets under management (AuM).
By the end of June, the FTSE 250 company's AuM totaled $49.3 billion, bolstered by a $2.1 billion gain from investment performance. Although redemptions were lower, the firm experienced net outflows amounting to $8.5 billion.
Adjusted net revenue reached £187.8 million, marking a 4% decline from the previous year, primarily due to a 10% reduction in average AuM. Performance fees played a significant role in revenue, increasing from £5.1 million in 2023 to £22.7 million in 2024. However, net management fees decreased by 12%, contributing to an overall adjusted EBITDA decline of 27%, with EBITDA totaling £77.9 million.
Operating costs rose by 22%, influenced by variable remuneration linked to performance fees, capital gains, and interest income. Despite these cost pressures, Ashmore achieved a 15% increase in profit before tax, reaching £128.1 million, supported by a £21.7 million gain from seed capital investments and £24.9 million in interest income. Additionally, the company realized a £5.2 million gain from investment disposals.
Diluted earnings per share (EPS) increased by 12% to 13.6p, although adjusted diluted EPS fell by 17% to 10.5p. Ashmore maintained a robust balance sheet, with £700 million in capital resources, including £500 million in cash and deposits. The final dividend was held at 12.1p per share, contributing to a total of 16.9p per share for the year.
The firm’s active management strategy demonstrated medium-term investment outperformance, with approximately 60% of AuM exceeding benchmarks over three and five years. Ashmore indicated readiness to capitalize on emerging markets growth, with equities AuM rising by 8% and local asset management platforms expanding AuM by 7% to $7.5 billion.
Looking ahead, Ashmore anticipates continued resilience in emerging markets, driven by effective economic policies and strong fundamentals. CEO Mark Coombs highlighted that while current uncertainties, such as the timing of the next Federal Reserve rate cycle and the US election outcome, may impact capital flows, the company expects increased investor interest in emerging markets as these issues are resolved.
As pent-up demand is unleashed, momentum in emerging markets is projected to build through the latter half of 2024 and into 2025. Ashmore’s scalable operating platform positions it well to benefit from increased capital flows to emerging markets as investor risk appetite grows. Shares in Ashmore Group were up 2.08% at 176.5p as of 0904 BST.
