7th Sep 2018 08:26
LONDON (Alliance News) - Ashmore Group PLC on Friday reported a drop in annual profit despite record net inflows and an increase in assets under management, as the investment manager plans an Irish office to avoid the fallout from Brexit.
In the year ended June 30, the FTSE 250-listed emerging markets investment manager posted a 7.2% decrease in pretax profit to GBP191.3 million from GBP206.2 million.
Total revenue increased 11% to GBP285.7 million from GBP257.2 million.
Ashmore increased its assets under management by 26% to USD73.9 billion from USD58.7 billion in the year. This reflected record net inflows for Ashmore of GBP16.9 billion, up 47% from the year before.
The emerging markets investor said its net flows were strongest in its local currency, blended debt, and corporate debt themes. By client type, retail intermediary, pension funds, government-related pension schemes and insurance companies produced strong net flows.
Gross subscriptions doubled to a record USD30.0 billion from USD14.8 billion. Gross redemptions were at a "similar level", GBP13.1 billion from GBP12.8 billion, but dropped as a proportion of assets under management to 22% from 26%.
The growth in subscriptions was "broadly spread across investment themes" - with the most significant coming from European retail clients, local currency funds and blended debt.
Ashmore said 73% of its assets under management outperformed their benchmarks for the year.
Management fees increased 15% to GBP259.7 million from GBP226.2 million.
Ashmore proposed a final dividend of 12.10 pence per share, for a total of 16.65p per share. Both flat on the year before.
The London-listed company also said it plans to open an office in Ireland due to the "substantial uncertainty regarding the terms and the implications for the financial services industry" in the Brexit negotiations.
Looking ahead, Ashmore stressed that the recent challenges faced by the emerging markets countries was not caused by a "deterioration in economic fundamentals" but instead "developed world events".
As such, Ashmore believes the outlook for these countries remains positive. The company believes the recent downward trend presents "another highly attractive entry", similar to levels from just after the US presidential elections.
Ashmore does not expect to repeat its "very strong" net flow performance, but does remain a positive outlook.
Chief Executive Officer Mark Coombs said: "Ashmore has delivered a strong operating performance over the financial year, driven by continued investment outperformance, record inflows, an ongoing commitment to cost discipline and good cash generation. This performance reflects the effectiveness of Ashmore's business model and the success of key strategic initiatives such as growing retail assets under management and developing scale and diversity in the group's local asset management businesses.
"While asset prices were more volatile in the final quarter of the financial year, this largely reflected nervousness about a small number of emerging countries with particular issues such as Turkey, with the market extrapolating these concerns across the broad and highly diverse Emerging Markets universe of more than 70 countries. This mispricing therefore presents another very appealing entry point for investors."
Shares in Ashmore were up 2.7% Friday at 354.60 pence.
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