Final Results

RNS Number : 3700R

Ashmore Group PLC

11 September 2014

 



Ashmore Group plc

11 September 2014

RESULTS FOR THE YEAR ENDING 30 JUNE 2014

Ashmore Group plc (Ashmore, the Group), the specialist Emerging Markets asset manager, today announces its audited results for the year ending 30 June 2014.

Highlights

·      Resilient assets under management of US$75.0 billion at the year end (30 June 2013: US$77.4 billion).

·      Strong long-term investment performance with 81% of AuM outperforming benchmarks over three years and 92% over five years (30 June 2013: 92% and 73%, respectively).

·      Sound operational performance and good cost control, total operating costs reduced by 23% to £97.9 million (FY2012/13: £127.2 million).

·      Adjusted EBITDA £171.0 million (FY2012/13: £249.2 million) resulting in a margin of 65% (FY2012/13: 70%).

·      PBT declined 34% to £170.3 million (FY2012/13: £257.6 million), and declined 16% at constant exchange rates.

-      largely explained by Sterling strength (£46m impact) and lower performance fees (£30m impact).

·      Basic EPS 19.3p (FY2012/13: 30.0p).

·      Diluted EPS 18.4p (FY2012/13: 28.7p).

-      foreign exchange translation effects reduced diluted EPS by approximately 4p.

·      Strong cash generation supports progressive dividend policy. Proposed final dividend of 12.0p, giving a 2% increase in full year dividend to 16.45p (FY2012/13: 16.10p).

Commenting on the Group's results, Mark Coombs, Chief Executive Officer, Ashmore Group said:

"Ashmore's financial results for the year reflect the impact of market volatility experienced for much of the period and the effects of Sterling strength. The operational performance was sound, operating cost control and flexibility was demonstrated, and the Group continued to make strategic progress in the period.

"Emerging nations are generally in good health; aggregate GDP growth in Emerging Markets was 4.5% in 2013 and is expected to be higher still in 2014, inflation is at acceptable levels, and FX reserves remain strong. This is an important backdrop as the global economy evolves; Developed Markets are weaning themselves off unprecedented monetary policy experiments while Emerging Markets need to decide how to manage substantial FX reserves in the face of potential foreign currency weakness. This will lead to greater balance and rising Emerging Markets relevance in investment portfolios. Investors will increasingly need to differentiate between those countries and companies that foresee and plan for the unwinding of global imbalances, and those that are ill-prepared.

"Ashmore's absolute focus on Emerging Markets and its depth of knowledge and experience of investing across market cycles position it well to manage the risks and opportunities that will be presented by this evolution to a more balanced global economy in the coming years."

Analysts briefing

There will be a presentation for analysts at 9am on 11 September 2014 at the offices of Goldman Sachs International at Peterborough Court, 133 Fleet Street, London EC4A 2BB. A copy of the presentation will be made available on the Group's website at www.ashmoregroup.com.

Contacts

For further information please contact:

Ashmore Group plc

Tom Shippey                                    [phone]
Group Finance Director

Paul Measday                                   [phone]
Investor Relations

FTI Consulting

Andrew Walton                                [phone]

Paul Marriott                                     [phone]

Chairman's statement

Market conditions in the financial year were the reverse of those experienced in the previous year, in that turbulence prevailed for much of the period before a recovery in sentiment and asset prices occurred in the second half. Ashmore's proven investment processes and deep-rooted knowledge of Emerging Markets enabled it to take on risk as opportunities inevitably presented themselves in a period of volatile prices.

Assets under management proved robust given the market backdrop, with a 3% decline to US$75.0 billion attributable in most part to redemptions from the lower margin overlay/liquidity theme, while the other investment themes delivered a resilient performance. While the Group's operational performance was sound, the financial results for the year were affected by the strength of Sterling, particularly against the US dollar.

Profit before tax of £170.3 million is a reduction of 34% or £87.3 million compared with the prior year, of which £46.0 million⁽¹⁾ is attributable to FX translation effects and £30.1 million⁽¹⁾ to lower performance fees as a consequence of the market sell-off in May and June 2013 and continued volatility throughout the first half of the financial year. The remainder is largely explained by a reduction in net management fees, offset by lower operating costs, which declined 23%. This cost reduction was achieved through the Group's continual focus on cost efficiency and its distinctive remuneration philosophy which together deliver a highly flexible expense base.

The Board intends to pay a progressive dividend over time, taking into consideration factors such as prospects for the Group's earnings, demands on the Group's financial resources, and the markets in which the Group operates. Reflecting the sound operating performance over the year, the Group's strong and liquid balance sheet, and the Board's confidence in future growth, the Directors are recommending a final dividend of 12.00 pence per share for the year ended 30 June 2014. Subject to shareholders' approval, the final dividend will be paid on 5 December 2014 to those shareholders on the register on 7 November 2014. This makes a total dividend of 16.45 pence for the year, an increase of 2% compared with the prior year (16.10 pence).

Corporate governance

Changes to the UK Listing Rules, effective 1 July 2014, require a company with a Premium listing and a controlling shareholder, in this instance one who controls at least 30% of the company's voting rights, to enter into a relationship agreement with the shareholder in relation to compliance with the company's obligations under the Listing Rules. The revised rules require the company to make an annual statement that it has a relationship agreement in place and that the company, and, so far as it is aware, the controlling shareholder, have complied with the Listing Rules. Mark Coombs, Ashmore's Chief Executive, controls 40.8% of Ashmore's voting rights and consequently the company has entered into a relationship agreement with Mr Coombs, effective 1 July 2014.

The new rules also require the election and re-election of independent directors to be by a majority of votes cast by independent shareholders as well as by a majority of votes cast by all shareholders. These rules will apply to the Ashmore annual general meeting to be held on 30 October 2014.

Melda Donnelly, who has been a member of the Board since July 2009, will retire and not seek re-election at the AGM. On behalf of the Board, I would like to thank Melda for the valuable service and contribution that she has given to the Group over the past five years.

Outlook

Ashmore's singular focus on Emerging Markets has enabled it to contend with the volatile market conditions evident for most of the past financial year. Assets under management were resilient, and the Group's investment processes identified and acted upon value becoming apparent as non-dedicated investors withdrew from the asset class. The diversity of Emerging Markets requires a specialist, active investment approach and Ashmore's long track record positions it well for future profitable growth.

Finally, on behalf of the Board, I would like to thank Ashmore's employees across the world for the dedication and commitment shown once again over the past year.

Michael Benson

Chairman

10 September 2014

(1)               Before variable compensation

Chief Executive Officer's report

The results for the year ending 30 June 2014 reflect the market turbulence that persisted for much of the period, together with foreign exchange translation effects as a consequence of the strength of Sterling against the US dollar. The Group's long-standing investment processes sought to take advantage of the market volatility, and while this can result in short-term underperformance, the recovery in sentiment towards Emerging Markets in recent months has benefited positions taken during those more volatile periods over the course of the year.

AuM development

Assets under management declined by 3% during the year from US$77.4 billion to US$75.0 billion, and average AuM increased by 4% to US$75.2 billion. Investment performance added US$5.1 billion to AuM, but was offset by net outflows of US$7.5 billion for the year of which US$5.9 billion was in the lower margin overlay/liquidity theme. The Group's other investment themes experienced a net outflow of US$1.6 billion, or 2% of average AuM, which is relatively stable when set against the backdrop of market volatility during the period.

Gross subscriptions of US$16.8 billion were broadly spread across the Group's investment themes, and at 22% of opening AuM were encouraging given market conditions. This performance reflects Ashmore's broad base of largely institutional clients together with the Group's recent investment in global distribution resources.

Investment performance

Positive investment performance of US$5.1 billion was delivered across a broad range of equity and fixed income themes. Ashmore's value-based investment processes identified three salient opportunities during the period.

First, the indiscriminate selling of assets by non-dedicated investors created opportunities for those with a specialist and dedicated approach to Emerging Markets investing. In mid-2013 after the initial QE tapering-inspired sell-off, the yield curves in several Emerging Markets implied substantial monetary policy tightening, which was at odds with a fundamental assessment of the probable path of future interest rates in those countries. Indeed, several central banks cut policy rates, thereby highlighting further the disconnect between periodically inefficient market prices and a rational appraisal of the economic and political reality.

Second, throughout 2013, concerns about certain Emerging Markets countries, which focused on current account or fiscal deficits and a belief that historical crises and contagion would repeat themselves, proved largely unfounded. The diversity and development of the asset class, when compared with historical periods of Emerging Markets crises, are fundamental strengths that proved resilient through the recent market turbulence. India is a case in point: its current account deficit narrowed from 4.8% of GDP in June 2013 to 1.7% a year later; the recent election resulted in a business and market-friendly administration with the potential to pursue significant reforms; and the country's economic position could be improved further still by the liberalisation of its local bond markets. India's perceived fragility has revealed itself to be a set of cyclical challenges that can be, and are being, overcome.

Third, geo-political risk creates uncertainty and the potential for assets to be mis-priced, and particularly so in the still relatively inefficient Emerging Markets. There were several instances during the year of market weakness inspired by rising geo-political tension, which necessitated assessment and detailed analysis by the Group's investment committees. The implementation of active portfolio management delivered good investment performance in the second half of the year.

Ashmore's three and five-year investment track records continue to be strong with 81% and 92% of AuM outperforming relevant benchmarks, respectively (30 June 2013: 92% and 73%, respectively). The one-year figures are weaker with 38% of AuM outperforming, typical in periods of market drawdowns given Ashmore's investment processes, but towards the end of the financial year the recovery in asset prices across Emerging Markets vindicated the investment decisions taken.

Financial performance

Revenue

Net revenue for the year of £262.9 million was 26% lower than in the prior year. The reduction was principally the result of Sterling strength against the US dollar and its effect on the translation of US dollar-denominated revenues and the Group's non-Sterling assets and liabilities, together with a lower contribution from performance fees.

Management fee income net of distribution costs declined by 10%, reflecting a reduction in average net management fee margin of 8bps to 60bps and the effect of Sterling appreciation against the US dollar, partially offset by higher average AuM. The movement in the management fee margin is described in more detail in the Business review, but it is notable that the margin exhibited greater stability through the financial year; the H1 2013/14 margin was 61bps, equivalent to the exit run-rate from the prior financial year, and the H2 2013/14 margin was approximately 60bps.

Performance fees of £3.1 million were lower than the prior year (£33.4 million) as a consequence of the market sell-off in May and June 2013 and then periodic volatility throughout much of the financial year. Funds with an August year end realised performance fees of £4.0 million in August 2014 that will be reflected in the FY2014/15 financial year.

The Group receives the majority of its fees in US dollars, which are sold to satisfy Sterling or other currency payments. Most of the Group's cash is therefore held in US dollars, and is marked-to-market at the balance sheet date with corresponding changes in value taken through the 'Foreign exchange' revenue line together with any gains or losses on currency hedges. As a result of Sterling strengthening by over 12% during the period, from 1.5213 to 1.7106, there was a foreign exchange translation loss of £30.1 million (FY2012/13: £5.9 million gain). Net realised and unrealised hedging gains were £3.5 million (FY2012/13: £1.2 million loss).

Operating cost structure

The Group's operating cost base reflects a focus on efficiency and management of fixed cost inflation while enabling appropriate investment to support future growth.

The majority of costs relate to staff; the Group's distinctive remuneration philosophy maintains a relatively low cap on fixed salary costs and a strong bias towards variable performance-related remuneration. An emphasis is placed on long-term equity ownership. In the year to June 2014, variable compensation as a percentage of earnings before variable compensation, interest and tax (VC/EBVCIT) was 20% (FY2012/13: 20%).

Total operating costs declined 23% to £97.9 million (FY2012/13: £127.2 million), through the continual focus on cost efficiency and the inherently high flexibility of the cost base that derives from the Group's remuneration structure.

During the year, the Group further developed its global operating platform to enable additional growth and complexity in fund management relationships, and to comply with changing regulatory requirements. As a consequence, the appropriate operating platform is in place for the next phase of the Group's development.

Profitability

Earnings before interest, tax, depreciation and amortisation (EBITDA) was £174.7 million (FY2012/13: £252.2 million). The EBITDA margin was 66% (FY2012/13: 71%), confirming the Group's long-held view that it would move into the '60s' over time.

Net finance income of £2.5 million (FY2012/13: £25.7 million) includes items relating to seed capital investments and the acquisition of the Group's equities business in 2011, both of which are described in more detail in the Business review.

Profit before tax for the year declined by 34% to £170.3 million (FY2012/13: £257.6 million) and basic earnings per share for the year were 19.3p (FY2012/13: 30.0p). Of the £87.3 million reduction in profit before tax, approximately £46 million is attributable to foreign exchange translation effects and £30 million to lower performance fees compared with the prior year period, before any variable compensation effects. The remaining difference is largely explained by the reduction in net management fees described above, offset by lower operating costs, and so, from an operational perspective, the Group's financial performance for the year was sound.

Strategic progress

Phase 1: establish Emerging Markets asset class

Ashmore continues to promote the fundamental strengths of Emerging Markets and the asset class is increasingly regarded as mainstream by investors. The experience of the past year suggests there is more to be done in enhancing the understanding of the diversity of investment opportunities available, and also to counter the long-standing prejudices and misconceptions that prevail in some investors' minds. Over time, the success of this phase of the Group's strategy will be reflected in higher institutional and, in due course, retail allocations to Emerging Markets, from what could be considered underweight positions when compared against either commonly used equity and fixed income benchmarks, or the balance of economic power and economic growth in the world today.

Phase 2: diversify developed world capital sources and themes

In December 2013, Ashmore became the first investment manager outside of Greater China to be awarded a Renminbi Qualified Foreign Institutional Investor (RQFII) licence. The licence gives access to the substantial onshore equity and fixed income markets in China and the Group is launching funds to address client demand for investments in the largest Emerging Market.

The Group has broadened its SICAV and 40-Act platforms, with a total of 32 funds now available in SICAV format (30 June 2013: 22 funds) and a total of nine US mutual funds (30 June 2013: seven funds). The investment in distribution has led to good progress with European and US intermediaries, in addition to institutional demand for such mutual fund structures.

Further product diversification has also been achieved during the year through the launch of short duration and private debt products. The short duration product seeks to provide income stability and lower interest rate sensitivity for investors concerned about the implications of higher interest rates. The Group's private debt fund will originate bilateral financing for Emerging Markets companies that have experienced the withdrawal of developed world banks from the market, and expands further the broad range of products available within the corporate debt theme.

Ashmore's strong and liquid balance sheet provides it with the ability to seed funds, creating a competitive advantage by supporting entry into new markets and development of new product structures and distribution channels. The Group's seed capital programme is managed actively, seeking to recycle capital back into cash when appropriate, and is subject to monitoring by the Board within a framework of set limits. Over the past four years, the Group has invested approximately £370 million (US$590 million) of seed capital into funds that now have over US$4 billion of third party AuM and which therefore make a material contribution to management fee income. Active management of the seed capital has resulted in approximately half of the investment amount being recycled over the four years. During the financial year, the Group made new seed capital commitments of £63.5 million and realised £48.0 million; as at 30 June 2014 there was £185.4 million of capital invested in funds at invested cost (£187.8 million at market value).

Ashmore acquired its equities business in May 2011, and with the three-year contingent consideration period ending in May 2014, no further consideration was paid in the financial year. Investment performance in the equities theme has improved considerably over the three years, with 47% of AuM outperforming relevant benchmarks over a three-year period and 70% over a one-year period as at 30 June 2014, compared with 8% and 3%, respectively, at the time of acquisition. During the second half of the financial year the equities theme experienced net inflows, and with substantial available capacity and a balanced mix of specialist and global funds, there are good prospects for AuM growth in equities. Indeed, recognition by institutional investors of Ashmore's equity investment capabilities is evident in the recent demand for balanced funds, combining fixed income and equity exposure in a single multi-strategy mandate.

During the period there was international institutional demand for mandates invested by locally-based investment teams that benefit from the structure, scale, best practices and resources of a global manager. If this continues as expected, it will continue to validate Ashmore's strategy to develop a network of local offices in selected Emerging Markets, and combined with its long heritage as a global manager of Emerging Markets risk, positions it well to attract these institutional flows from global investors as well as developing domestic client bases.

Phase 3: mobilise Emerging Markets capital

The third phase of the Group's strategy seeks to grow AuM from Emerging Markets-domiciled investors, to invest on a global basis or into the investors' domestic markets through the establishment of a number of onshore asset management platforms.

For example, Ashmore established a business in Indonesia in July 2012 and launched a range of funds in early 2013. After a period of strong absolute and relative investment performance, and with the support of Ashmore's global distribution platform, AuM has grown to approximately US$400 million at the year end.

In April 2014, Ashmore was granted a licence to establish a local investment platform in Saudi Arabia, the largest Gulf Cooperation Council economy. Saudi Arabia's real GDP growth is expected to average approximately 5% over the medium term, supporting GDP per capita convergence from a level that is only half that of the United States today. The country has favourable demographics and a high domestic savings rate relative to neighbouring countries, yet its asset management industry is fragmented and under-penetrated, reflecting the dominance of small family offices. This backdrop provides the potential for Ashmore to build and grow a meaningful independent asset management business over time, to add to its existing network of Emerging Markets-domiciled platforms.

People and culture

Graeme Dell stepped down from the Board and his role as Group Finance Director with effect from 25 November 2013. Tom Shippey, previously Ashmore's head of Corporate Development, was appointed Group Finance Director and joined the Board to succeed Graeme. On behalf of the Board, I would like to thank Graeme for the significant contribution he made to Ashmore's development over the past six years.

The Group's headcount was flat over the period at 291 (30 June 2013: 291). After investing in distribution and operational infrastructure areas in recent years, the Group has established a scalable platform with which to grow substantially.

Ashmore's employees have again demonstrated their commitment, deep knowledge and expertise in managing the business through more volatile market conditions, and seeking to identify opportunities to create value for clients. I should like to thank everyone for their efforts during the year, and particularly since it was a period when many headwinds combined to have a considerable impact on the Group's profitability.

Market review

The first seven months of the financial year presented more difficult conditions in Emerging Markets, with concerns regarding the effects of a change in US monetary policy, perceived weaknesses in certain developing economies, and rising geo-political risks. From January 2014, however, sentiment improved as many Emerging Markets countries successfully made cyclical adjustments, developed world central banks became more dovish, elections in the emerging world generally returned market-friendly outcomes, and contagion from geo-political flashpoints was limited. Emerging Markets asset prices consequently recovered. The performance of the Group's eight investment themes, and the outlook for each case, is presented below.

External debt

AuM decreased by US$0.5 billion during the year to US$14.0 billion, with strong investment performance adding US$1.5 billion, offset by net redemptions of US$0.9 billion and a reclassification of US$1.1 billion to blended debt following a change in investment guidelines on a segregated mandate. On an 'as invested' basis, external debt represents 30% of Group AuM (30 June 2013: 26%).

External debt was the best performing of Ashmore's fixed income investment themes over the year. The EMBI GD index returned 12% and high yield outperformed investment grade assets. The diversity of the index, with 61 countries, or approximately three times the number of developed nations in the world, is a positive characteristic and the index return masks a wide range of country performances over the period, from Mongolia (+4%) to Argentina (+59%). This highlights the need for active investment management to generate returns from such a diversified set of opportunities.

There is the potential for further spread tightening against US Treasuries, but the historical correlation of the index to Treasury yields is high at approximately 80% and therefore selective, active investment will be critical to generating alpha in a period of tighter financial conditions in the US. The Group believes allocations to external debt are likely to continue from those investors either unwilling or unable to take local currency risk in Emerging Markets.

Local currency

AuM reduced by US$0.3 billion over the period to US$17.3 billion. Investment performance added US$0.7 billion after a recovery in the second half of the year, but the theme experienced net redemptions of US$1.0 billion.

Gross subscriptions were good at 20% of opening AuM, however, the relatively weak performance of the asset class over the course of the 12 months, described below, inevitably led to some redemption activity from both mutual funds and segregated accounts. At the period end, local currency assets accounted for 32% of total Group AuM on an 'as invested' basis (30 June 2013: 30%), making it the Group's single largest investment theme on this basis.

After a period of underperformance earlier in the year, influenced by the flow of cross-over money out of the asset class, greater value became apparent and local currency assets rallied strongly from January 2014. The unhedged GBI-EM GD index rose 4% over the year, but increased 6% between January and June having yielded more than 7% at the lows. Countries such as India and Indonesia, which last summer were considered by some to be heading towards a repeat of historical Emerging Markets crises, instead demonstrated the progress they have made and confounded the sceptics by pursuing orthodox measures to address cyclical challenges, and are now in a position to deliver good levels of economic growth this year. The recent elections in these countries have also generally returned market-friendly administrations with mandates for reform.

Again, the diversity of the asset class is apparent in the range of returns over the 12 months, with the Indonesia sub-index falling 15% (though recovering 9% since January) and Nigeria returning 21%. There remains appreciable value in local currency assets, therefore with index representation likely to increase over time and the asset class offering diversification to US dollar-denominated assets, there are good prospects for AuM growth through higher investor allocations over the medium term.

Corporate debt

The corporate debt theme continued to see strong demand, with US$1.5 billion of net inflows during the year. The Group continues to broaden its range of corporate debt funds to access the full spectrum of investment opportunities available in this large and diverse asset class. For instance, Ashmore launched a private debt fund during the year, which will originate bilateral financing for Emerging Markets companies; demand for such financing is strong as Developed Markets banks have withdrawn from the market in the wake of the financial crisis. The Group also launched a short duration product that aims to reduce the price volatility associated with changes in US interest rates. After investment performance added US$0.6 billion, corporate debt AuM increased by US$2.1 billion, or 34%, to US$8.2 billion. The theme has also grown rapidly on an 'as invested' basis since its inception and has AuM of US$14.4 billion at the period end (30 June 2013: US$14.4 billion), representing 19% of total Group AuM (30 June 2013: 19%).

The CEMBI benchmark performed well over the period, increasing 10%, and benefiting in a period of volatile US Treasury yields from its short duration and higher yield compared with Emerging Markets sovereign credit. The opportunity in Emerging Markets corporate debt is large and diversified, and indices now address, albeit in a limited fashion, both the US$1.2 trillion hard currency market and the much larger US$5.8 trillion local currency market. The investment opportunities in Emerging Markets corporate debt are readily apparent, with the US dollar index yielding 5% and equivalent-rated bonds offering a yield pick-up of 50bps to 100bps for every turn of leverage (net debt/EBITDA) when compared with US high yield credits. To provide access to the large and diversified local currency market, Ashmore has seeded a local currency corporate debt product, which already has strong relative investment performance over one and three years compared with the recently established benchmark. Corporate debt is expected to remain one of Ashmore's fastest growing investment themes over the medium term.

 

Blended debt

Blended debt AuM increased by 17%, or US$3.0 billion, over the period to US$20.6 billion through a combination of strong performance, which added US$1.5 billion; continued net inflows of US$0.4 billion; and the reclassification of US$1.1 billion from external debt, described above. Blended debt is Ashmore's largest individual investment theme, and in addition to institutional demand it continues to be the most popular theme for retail clients on the Group's 40-Act and SICAV fund platforms.

The ability to allocate dynamically across fixed income markets is an attractive characteristic for investors that are new to the Emerging Markets asset class, and also recognises that there can be substantial variations in annual returns between sovereign and corporate credit, and hard and local currency assets. Over the past decade, the minimum difference in annual returns between the best and worst performing Emerging Markets fixed income asset classes has been 500bps. Over the past 12 months, the difference was 900bps, emphasising the need for active asset allocation to deliver investment returns in this asset class. Ashmore's competitive advantage is that it can demonstrate long-term investment track records in each of the constituent fixed income markets, and this supports the Group's belief that the blended debt investment theme has substantial future AuM growth opportunities.

Equities

AuM increased 11%, or US$0.6 billion, over the year to US$6.1 billion through investment performance of US$1.0 billion partially offset by a net outflow of US$0.4 billion. The net outflow was influenced by a small number of segregated mandate redemptions in the first half for historical performance reasons, however, the second half of the financial year saw an encouraging return to net inflows. There is notable demand from institutional investors for single country mandates and, reported separately in the multi-strategy theme, for funds that combine fixed income and equity exposures in a single mandate. On an 'as invested' basis, equities represent 10% (30 June 2013: 8%) of Group total AuM.

While declining market expectations for economic growth adversely affected sentiment towards equities, this was mainly reflected in the benchmark MSCI EM index which rose 14% over the year, but underperformed the S&P 500. The Frontier Markets index outperformed and returned 36%.

The small cap opportunity: there are 2,000 companies with a market capitalisation under US$2 billion that are not represented in major indices. Lack of inclusion does not necessarily mean lack of access or liquidity. Poor coverage, low correlations and a broad universe of companies provide opportunities for active stock pickers.

The prospects for growth in the equities business are positive. The equities investment process uses a wealth of knowledge built up over more than 25 years of investing solely in Emerging Markets, and this long track record enables a sense of perspective when faced with tougher market conditions. The Group's broad range of equity funds have established investment track records and there is ample capacity on an integrated platform to manage substantially higher levels of AuM.

Alternatives

AuM declined slightly from US$2.7 billion to US$2.5 billion. Capital returns to investors were offset by new subscriptions to give a net inflow of US$0.1 billion, and investment performance reduced AuM by US$0.3 billion over the period as a consequence of asset write-downs, largely within special situations funds.

As reported at the interim stage, with effect from 1 October 2013, the basis of calculation for the annual investment management fee on two of the Group's closed-end special situations funds was amended from 2% of acquisition cost to the lower of 2% of acquisition cost and 2% of net asset value. The structure of the funds and the nature of the investments mean that the effect is limited to these two funds and there are no wider implications for any of the Group's other funds or themes.

Also as described in the interim report, the alternatives theme net management fee margin is now stated after excluding the associates/joint ventures AuM, which represents just under 30% of theme AuM and for which the financial results are consolidated in a single line on the face of the income statement ('Share of profit from associates and joint ventures').

Approximately two-thirds of alternatives AuM is in the process of being realised and returned to investors and therefore, subject to market conditions, can be expected to reduce over the next few years. However, Ashmore continues to see growth opportunities in the management of illiquid assets, and seeks greater scale in areas such as private equity, real estate and infrastructure.

Multi-strategy

AuM declined by US$1.0 billion to end the period at US$2.7 billion. There were consistent and expected net outflows from Japanese retail funds during the period, and these funds now manage just over US$2 billion of assets (FY2012/13: US$3.5 billion). There is growing demand from institutional clients for mandates combining actively-managed fixed income and equity investments, and subscriptions of this nature partially offset the Japanese retail outflows towards the end of the year, albeit that the size of the individual institutional mandates naturally dictate a lower management fee margin compared with the Japanese retail capital. Investment performance contributed US$0.3 billion to AuM.

The diversity of the Emerging Markets asset classes and the broad range of return profiles available support alpha generation from dynamic asset allocation, and this supports growth in multi-strategy AuM over the medium term.

Overlay/liquidity

AuM reduced over the financial year from US$9.7 billion to US$3.6 billion, primarily through redemptions from segregated mandates. Net outflows were US$5.9 billion over the period and investment performance reduced AuM by US$0.2 billion. Redemptions in the period reflect institutional decisions to diversify individual manager exposure, while remaining allocated to the Emerging Markets asset class, and to reduce the scale of hedging employed. The size of individual redemptions reflects the nature of the product in that it provides a passive currency hedge for a third-party portfolio.

Outlook

Emerging nations are generally in good health and in aggregate are expected to grow faster than the developed world, thereby continuing to increase their importance to the global economy and exposing underweight allocations. The diversity and range of investment opportunities in Emerging Markets, requiring a specialist, active investment approach, have been much in evidence over the past year. Distinguishing between, say, Paraguay and Uruguay is critical, in the same way that a developed world investor needs to understand the profound differences between Spain and Switzerland, rather than merely investing in 'Europe'.

Rising geo-political risks in certain parts of the Emerging Markets world, as well as elections taking place in key economies, have led to uncertainty and hence price volatility in the short term. This environment provides opportunities to deliver longer-term performance for managers such as Ashmore that employ a disciplined, fundamental approach to assessing economic, political and market risks, and that continue to invest over the cycle.

Global imbalances are becoming more apparent as Developed Markets prepare to wean themselves off unprecedented monetary policy stimulus and Emerging Markets must decide how to manage their substantial reserves in the face of potential foreign currency weakness. Competition for investment capital will intensify, and the market will differentiate to a greater degree between the nations and companies that foresee and plan for the unwinding of the global economic imbalances, and those that are ill-prepared. Ashmore's absolute focus on Emerging Markets and its depth of knowledge and experience of investing across market cycles stand it in good stead to navigate the transition to a more balanced global economy in the coming years. These factors therefore underpin Ashmore's ability to deliver long-term outperformance and to generate value for clients and shareholders.

Mark Coombs

Chief Executive Officer

10 September 2014

Business review

Ashmore's operating performance for the year was sound, however, the financial results were influenced by the effects of foreign exchange translation. Profit before tax for the period was £170.3 million, a reduction of £87.3 million compared with the prior year of which approximately £46 million was due to the translation of non Sterling-denominated balance sheet items and £30 million was the result of lower performance fees, before any variable compensation effects.

Summary non-GAAP financial performance

The table below summarises the Group's operating performance and reclassifies items relating to seed capital and acquisitions to aid clarity and comprehension.

			Reclassification of
£m	FY2013/14 Statutory	Seed capital-related items		Acquisition-related items		FY2013/14 Adjusted		FY2012/13 Adjusted
Net revenue	262.9	-		-		262.9		355.5
Investment securities	7.0	(7.0)		-		-		-
Third-party interests	(2.3)	2.3		-		-		-
Operating expenses	(92.9)	1.0		-		(91.9)		(106.3)
EBITDA	174.7	(3.7)		-		171.0		249.2
Depreciation & amortisation	(5.0)	-		-		(5.0)		(9.2)
Operating profit	169.7	(3.7)		-		166.0		240.0
Net finance income/expense	2.5	(1.1)		(0.5)		0.9		1.6
Associates & joint ventures	(1.9)	-		-		(1.9)		(0.1)
Seed capital-related items	-	4.8		-		4.8		17.2
Acquisition-related items	-	-		0.5		0.5		(1.1)
Profit before tax	170.3	-		-		170.3		257.6

Assets under management

AuM declined by 3% over the year from US$77.4 billion to US$75.0 billion, through gross subscriptions of US$16.8 billion, redemptions of US$24.3 billion, and positive investment performance of US$5.1 billion. Average AuM increased 4% to US$75.2 billion.

Fund flows

The Group's gross subscriptions totalled US$16.8 billion for the year (FY2012/13: US$27.2 billion) and represented 22% of opening AuM. Demand was broadly spread by investment theme, by client type and domicile, and by mandate size. This balance and strength of new business reflects the Group's investment in recent years in its distribution infrastructure and global client coverage.

Redemptions increased to US$24.3 billion (FY2012/13: US$10.2 billion), representing 32% of average AuM (FY2012/13: 19%). The main factor behind the increase was a number of redemptions from the low revenue margin overlay/liquidity theme, which accounted for 26% of the total for the period. Redemptions from the Group's other investment themes, while higher compared with the prior year at US$17.9 billion (FY2012/13: US$12.4 billion), should be seen in the context of the volatile market backdrop that adversely affected sentiment towards Emerging Markets.

On a net basis, the Group outflow of US$7.5 billion was dominated by the US$5.9 billion net outflow from the overlay/liquidity theme, while the other investment themes experienced a net outflow of US$1.6 billion. The US$1.6 billion was concentrated in the middle of the financial year: the second and third quarters had a cumulative net outflow of US$4.3 billion, whereas the first quarter saw a US$0.7 billion net inflow and the year ended stronger with a fourth quarter net inflow of US$2.0 billion.

New funds and accounts

Ashmore continued to expand its product range during the period, including the launch of short duration and private debt funds and increasing the number of funds available on its SICAV and 40-Act fund platforms.

The Group ended the period with 201 funds (30 June 2013: 177 funds) and with segregated accounts representing 66% of AuM (30 June 2013: 61%). Institutional client demand for segregated accounts is expected to continue, reflecting a number of factors such as regulatory obligations, the application of specific investment guidelines, or particular reporting requirements. The Group's investment in operational infrastructure in recent periods ensures it is able to deliver the additional complexity that typically accompanies such funds.

AuM movements by investment theme

The AuM by theme as classified by mandate is shown in the table below. Reclassifications typically occur when a fund's investment objectives, investment guidelines or performance benchmark change such that its characteristics cause it to be included in a different theme.

Theme	AuM 30 June 2013 (US$bn)	Performance (US$bn)	Gross subscriptions (US$bn)	Gross redemptions (US$bn)	Net flows (US$bn)	Reclassification (US$bn)	AuM 30 June 2014 (US$bn)
External debt	14.5	1.5	2.1	(3.0)	(0.9)	(1.1)	14.0
Local currency	17.6	0.7	3.6	(4.6)	(1.0)	-	17.3
Corporate debt	6.1	0.6	3.2	(1.7)	1.5	-	8.2
Blended debt	17.6	1.5	5.1	(4.7)	0.4	1.1	20.6
Equities	5.5	1.0	1.2	(1.6)	(0.4)	-	6.1
Alternatives	2.7	(0.3)	0.5	(0.4)	0.1	-	2.5
Multi-strategy	3.7	0.3	0.6	(1.9)	(1.3)	-	2.7
Overlay/Liquidity	9.7	(0.2)	0.5	(6.4)	(5.9)	-	3.6
Total	77.4	5.1	16.8	(24.3)	(7.5)	-	75.0

AuM as invested

The following tables show AuM 'as invested' by underlying asset class, which adjusts from 'by mandate' to take account of the allocation into the underlying asset class of the multi-strategy and blended debt themes; and of cross-over investment from within certain external debt funds. This analysis highlights the scale of the local currency and corporate debt themes.

AUM as classified by mandate

	30 June 2014		30 June 2013
Theme	AuM (US$bn)	%	AuM (US$bn)	%
External debt	14.0	19	14.5	19
Local currency	17.3	23	17.6	23
Corporate debt	8.2	11	6.1	8
Blended debt	20.6	27	17.6	23
Equities	6.1	8	5.5	7
Alternatives	2.5	3	2.7	3
Multi-strategy	2.7	4	3.7	5
Overlay / Liquidity	3.6	5	9.7	12
Total	75.0	100	77.4	100

AUM as invested

	30 June 2014		30 June 2013
Theme	AuM (US$bn)	%	AuM (US$bn)	%
External debt	22.8	30	20.4	26
Local currency	23.9	32	23.1	30
Corporate debt	14.4	19	14.4	19
Equities	7.1	10	6.5	8
Alternatives	3.2	4	3.3	4
Overlay / Liquidity	3.6	5	9.8	13
Total	75.0	100	77.4	100

AuM by investment destination is diversified geographically, with 32% in Latin America, 27% in Asia Pacific, 12% in the Middle East and Africa, and 29% in Eastern Europe.

Investor profile

The Group's AuM remains predominantly institutional in nature (30 June 2014: 89%, 30 June 2013: 89%). The most significant institutional categories are government-related entities (central banks, sovereign wealth funds and pension schemes) and private and public pension plans, together accounting for 70% of AuM (30 June 2013: 71%).

AuM by investor type

Theme	30 June 2014 %	30 June 2013 %
Central banks	19	18
Sovereign wealth funds	8	8
Governments	9	15
Pension plans	34	30
Corporates/Financial institutions	15	12
Funds/Sub-advisers	2	4
Third-party intermediaries	11	11
Foundation/Endowments	2	2
Total	100	100

Capital sourced through intermediaries, which access retail investors, accounts for 11% of AuM (30 June 2013: 11%) or US$8.0 billion (30 June 2013: US$8.2 billion). Notwithstanding the market environment and volatile industry mutual fund flow data, the Group's intermediary businesses in the US and Europe delivered net inflows during the year, while Japanese retail funds continued to experience cyclical redemptions. The growth in the US and Europe demonstrates the progress made with wealth advisers, private banks, fund platforms and other intermediaries. For instance, Ashmore has distribution agreements with nine of the top ten US wealth management companies. The blended debt product has been particularly successful in attracting intermediary flows, echoing growing institutional demand for dynamic asset allocation capabilities, and accounts for over 60% of the US$1.1 billion AuM in the Group's US mutual funds.

AuM by investor geography

Theme	30 June 2014	30 June 2013
Americas	20%	19%
Europe ex UK	27%	20%
UK	12%	12%
Middle East & Africa	22%	19%
Asia Pacific	19%	30%
Total	100%	100%

Revenue analysis

The majority of the Group's net revenue derives from a diversified range of management fees net of distribution costs, which totalled £278.5 million for the year (FY2012/13: £311.2 million). Lower performance fees of £3.1 million (FY2012/13: £33.4 million) reflect the volatile market conditions experienced at the end of the prior financial year and periodically during the current year. The strength of Sterling against the US dollar during the period contributed to a negative foreign exchange translation effect of £30.1 million, which after gains from hedges resulted in a negative foreign exchange revenue impact of £26.6 million (FY2012/13: £4.7 million gain).

US dollar management and performance fees

The Group's AuM is predominantly US dollar-denominated and so the majority of management fees are also US dollar-denominated. The table below summarises net management fee income after distribution costs in US dollars and also net management fee margin by investment theme. As described in the Market review, the alternatives margin is stated after excluding the associates/joint venture AuM.

Theme	Net management fees FY2013/14 (US$m)	Net management fees FY2012/13 (US$m)	Average net management fee margin FY2013/14 (bps)	Performance fees FY2013/14 (US$m)	Performance fees FY2012/13 (US$m)
External debt	83.9	100.8	60	0.7	25.2
Local currency	83.6	85.0	49	0.3	10.8
Corporate debt	48.1	34.7	70	-	4.9
Blended debt	107.6	87.2	56	2.9	2.2
Equities	42.4	43.9	76	0.3	1.5
Alternatives	39.4	61.8	202	0.8	0.6
Multi-strategy	36.0	58.7	123	-	7.5
Overlay/Liquidity	13.6	15.7	19	-	-
Total	454.6	487.8	60	5.0	52.7

 

Management fees

Management fee income, net of distribution costs, was £278.5 million, a decline of 10% over the prior year (FY2012/13: £311.2 million). The 4% rise in average AuM was countered by a reduction in the average margin from 68bps to 60bps and a headwind from US dollar weakness against Sterling. On a constant currency basis, net management fee income declined by 8%.

Approximately 2bps of the margin decline is attributable to the annualised effect of several large mandates that funded in the second half of the prior financial year. The re-pricing of two alternatives funds in October 2013, as described in the Market review, accounts for 3bps, with the remaining 3bps reflecting all other factors, such as mandate size and investment theme and product mix effects.

Although the year-on-year movement in the net management fee margin is meaningful, it is noteworthy that the margin was broadly stable during the financial year. Compared with the 60bps reported for the year, the exit run-rate from the previous financial year was approximately 61bps,  the H1 2013/14 rate was also 61bps and the margin in H2 2013/14 was approximately 60bps. The level of the net management fee margin in a given period will continue to be influenced by many factors, including mandate size, client type, competition, investment theme mix and product mix within the various themes.

Performance fees

Performance fees were £3.1 million (FY2012/13: £33.4 million). The pronounced market sell-off at the end of the previous financial year and periods of volatility throughout this year meant that the ability to generate performance fees was limited. The recent recovery in asset prices has benefited performance, and funds with an August year end have realised performance fees totalling £4.0 million which will be recognised in the FY2014/15 financial year.

At the year end the Group was eligible to earn performance fees on 12% of AuM (30 June 2013: 18%), or 28% of funds (30 June 2013: 31%). Of these funds, 65% (30 June 2013: 56%) of them, while able to generate performance fees in the future, were ineligible to do so in FY2013/14 either as a result of such fees being available only at the end of the multi-year fund life, such funds not earning a fee in the performance year, or as a result of rebate agreements.

Operating costs

Ashmore's cost base remains tightly controlled. Fixed staff costs fell slightly to £24.6 million (FY2012/13: £25.1 million). The number of employees was flat at 291 (30 June 2013: 291) but the average increased from 280 to 290, reflecting recruitment in the prior year.

The charge for variable compensation is £41.5 million (FY2012/13: £57.2 million), representing 20% of earnings before variable compensation, interest and tax (FY2012/13: 20%). While the ratio is the same as the prior year, the absolute amount has reduced by 27% or £15.7 million to reflect the decline in Group net revenue described above.

Other operating costs fell by £13.1 million to £31.8 million (FY2012/13: £44.9 million), reflecting the absence of an intangibles impairment charge in the current year (FY2012/13: £11.0 million) and the Group's ongoing focus on cost efficiency. Total operating costs therefore decreased 23% to £97.9 million (FY2012/13: £127.2 million), or by 22% on a constant currency basis.

EBITDA

EBITDA for the period was £174.7 million (FY2012/13: £252.2 million). On an adjusted basis, reclassifying the contribution from seed capital investments and acquisition-related items, EBITDA was £171.0 million (FY2012/13: £249.2 million).

Consistent with the Group's long-held view that the EBITDA margin would trend lower over time, the margin for the financial year was 66% (FY2012/13: 71%). On an adjusted basis, the EBITDA margin was 65% (FY2012/13: 70%) with the reduction in performance fees and foreign exchange translation effects accounting for 3% points of the reduction.

Finance income

Net finance income of £2.5 million (FY2012/13: £25.7 million) includes items relating to seed capital investments and the acquisition of Ashmore Equities Investment Management. Net interest income for the year was £0.9 million (FY2012/13: £1.6 million).

Seed capital generated an investment return of £13.7 million during the period, of which £5.2 million was realised. The translation of non Sterling-denominated seed capital investments resulted in a foreign exchange translation loss of £14.4 million of which £0.3 million was realised. Together with £1.8 million of finance income recognised by consolidated funds, the aggregate result of seed capital activity recorded in net finance income was therefore a profit of £1.1 million (FY2012/13: £14.2 million).

Taxation

The majority of the Group's profit is subject to UK taxation; of the total current tax charge for the year of £35.7 million, £30.7 million relates to UK corporation tax. The Group's effective current tax rate for the year is 21.0% (FY2012/13: 21.7%) which is less than the blended UK corporation tax rate of 22.5% (FY2012/13: 23.75%).

Note 12 to the financial statements provides a full reconciliation of this deviation from the blended UK corporate tax rate.

There is a £16.8 million net deferred tax asset on the Group's balance sheet as at 30 June 2014 (30 June 2013: £18.0 million), principally as a result of timing differences in the recognition of the accounting expense and actual tax deduction in connection with share-based payments.

Balance sheet, cash flow and foreign exchange management

The Group maintains a strong and liquid balance sheet in order to support regulatory capital requirements, to meet the commercial demands of current and prospective investors, to support the Group's progressive dividend policy, and to fulfil development needs across the business. These include funding establishment costs of distribution offices and local asset management ventures, seeding new funds, trading or investment in funds or other assets, and other strategic initiatives.

As at 30 June 2014, total equity attributable to shareholders of the parent was £615.8 million (30 June 2013: £628.7 million). There is no debt on the Group's balance sheet.

Cash

The Group generated £210.4 million of cash from operations during the period (FY2012/13: £280.2 million), from which it paid the following significant items: £119.1 million in dividends (FY2012/13: £110.9 million); £48.3 million in taxation (FY2012/13: £59.4 million); £6.4 million in relation to seed capital investments (FY2012/13: £21.2 million); and £29.8 million to purchase own shares to satisfy share awards to employees (FY2012/13: £30.8 million).

Exchange rate translation effects reduced cash and cash equivalents by £32.1 million. Consequently, at the year end the Group had cash and cash equivalents of £370.6 million (30 June 2013: £395.5 million), held in the currencies shown in the table below.

Cash and cash equivalents by currency

	30 June 2014 £m	30 June 2013 £m
Sterling	100.3	167.2
US dollar	250.7	225.8
Other	19.6	2.5
Total	370.6	395.5

The Group's cash and cash equivalent balances are invested with the objective of optimising returns within a strict framework that emphasises capital preservation, security, liquidity and counterparty risk. The balances, 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 2014 (30 June 2013: A- to AAAm).

Seed capital investments

As at 30 June 2014 the amount invested in seed capital was £185.4 million (at cost) with a market value of £187.8 million (30 June 2013: £170.6 million at cost; £182.8 million market value). The 'at cost' investment represents 34% of Group net tangible equity (30 June 2013: 31%).

The majority of the Group's seed capital is held in liquid funds, such as daily-dealing SICAVs or US 40-Act mutual funds. Only 22% of the market value, and 19% of invested cost, or approximately £35 million, is held in funds with less than monthly liquidity. Seed capital is held in the currencies shown in the table below.

Seed capital by currency

	30 June 2014 £m	30 June 2013 £m
US dollar	122.8	115.6
Indonesian rupiah	36.2	46.9
Brazilian real	17.5	18.1
Other	11.3	2.2
Total market value	187.8	182.8

Ashmore manages its seed capital actively, seeking to recycle investments rather than locking the capital up for an extended period. During the financial year the Group made new commitments of £63.5 million (FY2012/13: £149.0m) and realised £48.0 million from previous investments (FY2012/13: £129.9 million).

Further details of the movements of seed capital items during the year can be found in note 21 to the financial statements. The total contribution of seed capital activities to Group profit before tax for the year was £4.8 million (FY2012/13: £17.2 million). This comprises gains on investment securities of £7.0 million (FY2012/13: £4.9 million) and finance income of £1.8 million (FY2012/13: £1.6 million), offset by operating expenses in consolidated funds of £1.0 million (FY2012/13: £0.7 million), third-party interests in consolidated funds of £2.3 million (FY2012/13: £1.2 million), and other loss on seed capital investments of £0.7 million (FY2012/13: £12.6 million gain).

Own shares held

The Group purchases and holds shares through an Employee Benefit Trust (EBT) in anticipation of the exercise of outstanding share options and the vesting of share awards. At 30 June 2014 the EBT owned 37,962,631 (30 June 2013: 35,205,106) ordinary shares.

Goodwill and intangible assets

Total goodwill and intangible assets on the Group's balance sheet at 30 June 2014 are £72.2 million (30 June 2013: £84.3 million) with the decrease attributable to the amortisation charge of £3.8 million (FY2012/13: £5.1 million) and foreign exchange revaluation through reserves of £8.3 million (FY2012/13: £2.3 million gain).

Foreign exchange management

The majority of the Group's fee income is received in US dollars and it is the Group's established policy to hedge up to two-thirds of the notional value of up to two years' budgeted foreign exchange-denominated net management fees, using either forward or option foreign exchange contracts. The Foreign Exchange Management Committee determines the proportion of budgeted fee income to hedge by regular reference to expected non-US dollar, and principally Sterling, cash requirements. The hedging contracts effectively create a corridor outside of which the proportion of fee income hedged is protected from movements in the GBP:USD rate. When the contracts expire, either they deliver Sterling or the Group sells the notional amount of US dollars for Sterling at the prevailing spot rate.The proportion of fee income received in foreign currency and not subject to hedging is held as cash or cash equivalents in the foreign currency and marked to market at the period end exchange rate.

For most of the period the GBP:USD rate remained within the corridor, outside of which protection is provided by the Group's hedging programme. There was a £3.5 million gain (FY2012/13: £1.2 million loss) on realised and unrealised hedging transactions. The foreign exchange translation of non-Sterling assets and liabilities, other than seed capital, resulted in a loss of £30.1 million (FY2012/13: £5.9 million gain) for the period since Sterling strengthened over 12% against the US dollar during the year, from 1.5213 to 1.7106.

Regulatory capital

As a UK listed asset management group, Ashmore is subject to regulatory supervision by the Financial Conduct Authority (FCA) under the Prudential Sourcebook for Banks, Building Societies and Investment Firms. At the year end the Group had one UK-regulated entity, Ashmore Investment Management Limited (AIML), on behalf of which half-yearly capital adequacy returns are filed. AIML held excess capital resources relative to its requirements at all times during the period under review.

Since 1 January 2007, the Group has been subject to consolidated regulatory capital requirements, whereby the Board is required to assess the degree of risk across the Group's business, and is required to hold sufficient capital against these requirements.

The Board has assessed the amount of Pillar II capital required to cover such risks as £72.9 million (30 June 2013: £87.0 million), with the reduction compared with the prior year the result of lower market volatility leading to a decrease in the value at risk multiplier. Thus, given the considerable balance sheet resources available to the Group, the Board is satisfied that the Group is adequately capitalised to continue its operations effectively.

In July 2014, in response to the requirements of the Alternative Investment Fund Managers Directive (AIFMD), the Group established and received FCA approval for an additional UK-regulated entity, Ashmore Investment Advisors Limited (AIAL). The establishment of AIAL has no effect on the Group's regulatory capital position.

Dividend

In recognition of Ashmore's operating and financial performance during the period, its balance sheet strength, and of the Board's confidence in the Group's future prospects, the Directors are recommending a final dividend of 12.00 pence per share for the year ending 30 June 2014, which, subject to shareholder approval, will be paid on 5 December 2014 to those shareholders who are on the register on 7 November 2014.

An interim dividend for the six-month period to 31 December 2013 of 4.45 pence per share (31 December 2012: 4.35 pence per share) was paid on 11 April 2014. Together, these result in a full year dividend of 16.45 pence per share (2013: 16.10 pence per share), an increase of 2%.

Tom Shippey

Group Finance Director

10 September 2014

Consolidated statement of comprehensive income

For the year ended 30 June 2014

	Notes	2014 £m	2013 £m
Management fees		283.1	316.0
Performance fees		3.1	33.4
Other revenue		7.9	6.2
Total revenue		294.1	355.6
Distribution costs		(4.6)	(4.8)
Foreign exchange	7	(26.6)	4.7
Net revenue		262.9	355.5
Gains on investment securities	21	7.0	4.9
Change in third-party interests in consolidated funds	21	(2.3)	(1.2)
Personnel expenses	9	(66.1)	(82.3)
Other expenses	11	(31.8)	(44.9)
Operating profit		169.7	232.0
Finance income	8	8.7	26.6
Finance expense	8	(6.2)	(0.9)
Share of gains/(losses) from associates and joint ventures	28	(1.9)	(0.1)
Profit before tax		170.3	257.6
Tax expense	12	(36.9)	(56.0)
Profit for the year		133.4	201.6
Other comprehensive income, net of related tax effect
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences arising on foreign operations		(18.7)	2.6
Fair value reserve (available-for-sale financial assets):
Net change in fair value		(3.5)	0.1
Net amount transferred to profit or loss		(2.5)	(1.9)
Cash flow hedge intrinsic value gains/(losses)		2.8	(0.4)
Other comprehensive income, net of tax		(21.9)	0.4
Total comprehensive income for the year		111.5	202.0
Profit attributable to:
Equity holders of the parent		130.8	202.2
Non-controlling interests		2.6	(0.6)
Profit for the year		133.4	201.6
Total comprehensive income attributable to:
Equity holders of the parent		109.5	202.2
Non-controlling interests		2.0	(0.2)
Total comprehensive income for the year		111.5	202.0
Earnings per share
Basic	13	19.29p	29.98p
Diluted	13	18.44p	28.69p

Consolidated balance sheet

As at 30 June 2014

	Notes	2014 £m	2013 £m
Assets
Non-current assets
Goodwill and intangible assets	15	72.2	84.3
Property, plant and equipment	16	3.0	3.7
Investment in associates and joint ventures	28	9.7	11.8
Non-current asset investments	21	11.7	9.1
Other receivables		0.2	0.1
Deferred acquisition costs	17	-	0.6
Deferred tax assets	19	21.3	21.0
		118.1	130.6
Current assets
Investment securities	21	70.7	49.7
Available-for-sale financial assets	21	48.5	55.6
Fair value through profit or loss investments	21	25.3	-
Trade and other receivables	18	64.0	77.3
Derivative financial instruments	22	2.4	-
Cash and cash equivalents		370.6	395.5
		581.5	578.1
Non-current assets held-for-sale	21	39.1	104.9
Total assets		738.7	813.6
Equity and liabilities
Capital and reserves - attributable to equity holders of the parent
Issued capital	23	-	-
Share premium		15.7	15.7
Retained earnings		616.4	608.0
Foreign exchange reserve		(12.8)	5.3
Available-for-sale fair value reserve		(5.3)	0.7
Cash flow hedging reserve		1.8	(1.0)
		615.8	628.7
Non-controlling interests		16.4	17.1
Total equity		632.2	645.8
Liabilities
Non-current liabilities
Deferred tax liabilities	19	4.5	3.0
		4.5	3.0
Current liabilities
Current tax		16.4	28.9
Third-party interests in consolidated funds	21	13.5	12.8
Derivative financial instruments	22	-	2.1
Trade and other payables	26	69.4	94.1
		99.3	137.9
Non-current liabilities held-for-sale	21	2.7	26.9
Total liabilities		106.5	167.8
Total equity and liabilities		738.7	813.6

Approved by the Board on 10 September 2014 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 2014

	Attributable to equity holders of the parent
	Issued capital £m	Share premium  £m	Retained earnings £m	Foreign exchange reserve £m	Available-for-sale  reserve £m	Cash flow hedging reserve £m	Total £m	Non-controlling interests £m	Total equity  £m
Balance at 30 June 2012	-	15.7	516.6	3.1	2.5	(0.6)	537.3	20.8	558.1
Profit for the year	-	-	202.2	-	-	-	202.2	(0.6)	201.6
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations	-	-	-	2.2	-	-	2.2	0.4	2.6
Net fair value gain on available-for-sale assets including tax	-	-	-	-	0.1	-	0.1	-	0.1
Net gains reclassified from available-for-sale reserve to comprehensive income	-	-	-	-	(1.9)	-	(1.9)	-	(1.9)
Cash flow hedge intrinsic value losses	-	-	-	-	-	(0.4)	(0.4)	-	(0.4)
Total comprehensive income/(loss)	-	-	202.2	2.2	(1.8)	(0.4)	202.2	(0.2)	202.0
Transactions with owners:
Purchase of own shares	-	-	(30.8)	-	-	-	(30.8)	(1.3)	(32.1)
Share-based payments	-	-	25.5	-	-	-	25.5	3.5	29.0
Deferred tax related to share-based payments	-	-	(0.7)	-	-	-	(0.7)	-	(0.7)
Proceeds received on exercise of vested options	-	-	0.4	-	-	-	0.4	-	0.4
Dividends to equity holders	-	-	(105.2)	-	-	-	(105.2)	-	(105.2)
Dividends to non-controlling interests	-	-	-	-	-	-	-	(5.7)	(5.7)
Total contributions and distributions	-	-	(110.8)	-	-	-	(110.8)	(3.5)	(114.3)
Balance at 30 June 2013	-	15.7	608.0	5.3	0.7	(1.0)	628.7	17.1	645.8
Profit for the year	-	-	130.8	-	-	-	130.8	2.6	133.4
Other comprehensive income/(loss):
Foreign currency translation differences arising on foreign operations	-	-	-	(18.1)	-	-	(18.1)	(0.6)	(18.7)
Net fair value gain on available-for-sale assets including tax	-	-	-	-	(3.5)	-	(3.5)	-	(3.5)
Net gains reclassified from available-for-sale reserve to comprehensive income	-	-	-	-	(2.5)	-	(2.5)	-	(2.5)
Cash flow hedge intrinsic value losses	-	-	-	-	-	2.8	2.8	-	2.8
Total comprehensive income/(loss)	-	-	130.8	(18.1)	(6.0)	2.8	109.5	2.0	111.5
Transactions with owners:
Purchase of own shares	-	-	(29.8)	-	-	-	(29.8)	-	(29.8)
Share-based payments	-	-	19.9	-	-	-	19.9	3.9	23.8
Dividends to equity holders	-	-	(112.5)	-	-	-	(112.5)	-	(112.5)
Dividends to non-controlling interests	-	-	-	-	-	-	-	(6.6)	(6.6)
Total contributions and distributions	-	-	(122.4)	-	-	-	(122.4)	(2.7)	(125.1)
Balance at 30 June 2014	-	15.7	616.4	(12.8)	(5.3)	1.8	615.8	16.4	632.2

Consolidated cash flow statement

For the year ended 30 June 2014

	2014 £m	2013 £m
Operating activities
Cash receipts from customers	294.9	358.7
Cash paid to suppliers and employees	(84.5)	(78.5)
Cash generated from operations	210.4	280.2
Taxes paid	(48.3)	(59.4)
Net cash from operating activities	162.1	220.8
Investing activities
Interest received	0.5	2.7
Dividends received	0.3	1.7
Acquisitions	-	(9.0)
Contingent consideration payments	-	(8.6)
Purchase of non-current asset investments	(2.0)	(3.5)
Purchase of non-current financial assets held-for-sale	(30.4)	(102.6)
Purchase of available-for-sale financial assets	(21.3)	(42.9)
Purchase of investment securities	(31.5)	(62.0)
Sale of non-current asset investments	2.3	0.2
Sale of non-current financial assets held-for-sale	12.7	32.5
Sale of available-for-sale financial assets	24.9	73.5
Sale of investment securities	17.7	51.1
Net cash flow arising on initial consolidation/deconsolidation of seed capital investments	8.6	(0.9)
Purchase of property, plant and equipment	(0.4)	(1.9)
Net cash used in investing activities	(18.6)	(69.7)
Financing activities
Dividends paid to equity holders	(112.5)	(105.2)
Dividends paid to non-controlling interests	(6.6)	(5.7)
Third-party subscriptions into consolidated funds	19.1	42.3
Third-party redemptions from consolidated funds	(6.0)	(7.9)
Distributions paid by consolidated funds	(0.5)	(1.0)
Purchase of own shares	(29.8)	(30.8)
Net cash used in financing activities	(136.3)	(108.3)
Net increase in cash and cash equivalents	7.2	42.8
Cash and cash equivalents at beginning of year	395.5	346.6
Effect of exchange rate changes on cash and cash equivalents	(32.1)	6.1
Cash and cash equivalents at end of year	370.6	395.5
Cash and cash equivalents at end of year comprise:
Cash at bank and in hand	74.8	78.4
Daily dealing liquidity funds	224.6	317.1
Deposits	71.2	-
	370.6	395.5

Company balance sheet

As at 30 June 2014

	Notes	2014 £m	2013 £m
Assets
Non-current assets
Goodwill and intangible assets	15	4.1	4.1
Property, plant and equipment	16	1.5	1.4
Investment in subsidiaries	27	20.1	20.1
Loans due from subsidiaries	18	-	18.9
Deferred tax assets	19	12.3	13.7
		38.0	58.2
Current assets
Trade and other receivables	18	256.9	257.8
Cash and cash equivalents		249.1	271.7
		506.0	529.5
Total assets		544.0	587.7
Equity and liabilities
Capital and reserves
Issued capital	23	-	-
Share premium		15.7	15.7
Retained earnings		495.5	526.2
Total equity attributable to equity holders of the Company		511.2	541.9
Liabilities
Current liabilities
Current tax		-	-
Trade and other payables	26	32.8	45.8
		32.8	45.8
Total liabilities		32.8	45.8
Total equity and liabilities		544.0	587.7

Approved by the Board on 10 September 2014 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 2014

	Issued capital £m	Share premium £m	Retained earnings  £m	Total equity attributable to equity holders of the parent £m
Balance at 30 June 2012	-	15.7	419.5	435.2
Profit for the year	-	-	220.1	220.1
Purchase of own shares	-	-	(30.8)	(30.8)
Share-based payments	-	-	22.9	22.9
Deferred tax related to share-based payments	-	-	(0.7)	(0.7)
Proceeds received on exercise of vested options	-	-	0.4	0.4
Dividends to equity holders	-	-	(105.2)	(105.2)
Balance at 30 June 2013	-	15.7	526.2	541.9
Profit for the year	-	-	94.4	94.4
Purchase of own shares	-	-	(29.8)	(29.8)
Share-based payments	-	-	17.2	17.2
Dividends to equity holders	-	-	(112.5)	(112.5)
Balance at 30 June 2014	-	15.7	495.5	511.2

Company cash flow statement

As at 30 June 2014

	2014 £m	2013 £m
Operating activities
Cash receipts from customers and other Group companies	86.4	79.7
Cash paid to suppliers and employees and other Group companies	(54.2)	(47.6)
Net cash from operating activities	32.2	32.1
Investing activities
Interest received	0.2	0.8
Loans to subsidiaries	(37.7)	(34.6)
Dividends received from subsidiaries	143.2	196.7
Purchase of property, plant and equipment	(0.4)	(0.7)
Net cash from investing activities	105.3	162.2
Financing activities
Dividends paid	(112.5)	(105.2)
Purchase of own shares	(29.8)	(30.8)
Net cash used in financing activities	(142.3)	(136.0)
Net (decrease)/increase in cash and cash equivalents	(4.8)	58.3
Cash and cash equivalents at beginning of year	271.7	210.6
Effect of exchange rate changes on cash and cash equivalents	(17.8)	2.8
Cash and cash equivalents at end of year	249.1	271.7
Cash and cash equivalents at end of year comprise:
Cash at bank and in hand	20.4	7.6
Daily dealing liquidity funds	183.7	264.1
Deposits	45.0	-
	249.1	271.7

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 2014 were authorised for issue by the Board of Directors on 10 September 2014.

2) Basis of preparation

The Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) effective for the Group's reporting for the year ended 30 June 2014 and applied in accordance with the provisions of the Companies Act 2006.

The financial statements have been prepared on a going concern basis under the historical cost convention, except for the measurement at fair value of certain financial assets that are available-for-sale or classified as fair value through profit or loss.

The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 which allows it not to present its individual statement of comprehensive income and related notes.

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors 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. Further information about key assumptions and other key sources of estimation and areas of judgement are set out in note 32.

3) Effects of new and amended IFRSs

New standards, interpretations and amendments adopted during the year

The following standards and amendments to standards relevant to the Group's operations were adopted during the year. Except where otherwise stated, these standards and amendments did not have a material impact on the Group's consolidated financial statements:

-      An amendment to IFRS 7 Financial instruments: Disclosures - offsetting financial assets and financial liabilities was issued by the IASB in December 2011 for retrospective application in annual periods beginning on or after 1 January 2013 and interim periods within those annual periods. The amendment was endorsed by the EU in December 2012. The amendments require disclosures regarding the Group's financial instruments that are either offset in the consolidated statement of financial position or subject to an enforceable master netting arrangement or similar agreement.

-      IFRS 13 Fair value measurement was issued by the IASB in May 2011 for prospective application in annual periods beginning on or after 1 January 2013 and was endorsed by the EU in December 2012. IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements, provides guidance on how to measure fair value when fair value is required or permitted across IFRSs and enhances disclosure requirements. Although the application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group, certain specific disclosures on fair values are required and are provided in note 20.

-      As part of the May 2012 Improvements to IFRSs, the IASB made amendments to the following standards that are relevant to the Group's operations: IAS 1 Presentation of Financial Statements, IAS 32 Financial Instruments: Presentation and IAS 34 Interim financial reporting for application in accounting periods beginning on or after 1 January 2013. The improvements were endorsed by the EU in March 2013.

New standards and interpretations not yet adopted

At the date of authorisation of these consolidated financial statements the following standards and interpretations relevant to the Group's operations were issued by the IASB but are not yet mandatory. Except where otherwise stated, the Group does not expect that the adoption of the following standards will have a material impact on the Group's consolidated financial statements.

-      IAS 27 Consolidated and separate financial statements and IAS 28 Investment in associates and joint ventures wererevised by the IASB in May 2011, for application in annual periods beginning on or after 1 January 2013. The revised standards were endorsed by the EU in December 2012 for application for annual periods starting on or after 1 January 2014. The Group plans to adopt the revised IAS 27 and IAS 28 with effect from 1 July 2014.

-      IFRS 10 Consolidated financial statements, IFRS 11 Joint arrangements and IFRS 12 Disclosure of interests in other entities were issued by the IASB in May 2011 for retrospective application in annual periods beginning on or after 1 January 2013. The standards were endorsed by the EU in December 2012 requiring application no later than annual periods starting 1 January 2014.

-      IFRS 10 revises the concept of control and provides that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The Group will need to determine whether it controls an investment fund that it manages by focusing on its aggregate economic interest in the fund (comprising any carried interests and expected management fees) and the investors' rights to remove the Group as the fund manager. The decision to consolidate any fund will be determined based on an assessment of whether the Group acts as an agent or not for the investors. However, consolidation procedures will remain unchanged.

-      The Group has assessed the impact on the consolidated balance sheet of adopting IFRS 10 effective from 1 July 2014. It is estimated that consolidated total assets and total liabilities will each increase by £59.3 million as a result of consolidating five additional funds where Ashmore's aggregate economic interest in the fund indicates that it acts as a principal. However, this will have £nil impact on the Group's reported net assets.

-      IFRS 12 Disclosure of Interests in Other Entities consolidates and enhances disclosure requirements relating to interests of an entity in other entities. It includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and unconsolidated structures. The Group expects to expand disclosures in respect of unconsolidated investment funds in which it has an interest or for which it is a sponsor.

-      Amendments to IFRS 10, IFRS 12 and IAS 27 Investment entities were issued by the IASB in October 2012 for application in annual periods beginning on or after 1 January 2014. The amendments were endorsed by the EU in November 2013. The amendments introduced a special accounting requirement for investment entities. Where a reporting entity meets the definition of an investment entity, it does not consolidate its subsidiaries, or apply IFRS 3 Business Combinations when it obtains control of another entity.

-      An amendment to IAS 32 Financial instruments: Presentation - offsetting financial instruments was issued by the IASB in December 2011, for retrospective application in annual periods beginning on or after 1 January 2014. The amendment was endorsed by the EU in December 2012.

-      An amendment to IAS 36 Recoverable amount disclosures for
non-financial assets was issued by the IASB in May 2013, for retrospective application in annual periods beginning on or after 1 January 2014.

-      IFRS 9 Financial instruments was originally issued in November 2009, reissued in October 2010, and then amended in November 2013. IFRS 9 includes requirements for recognition and measurement, derecognition and hedge accounting for financial instruments. The IASB intends to expand IFRS 9 to add new requirements for impairment of financial assets measured at amortised cost and include limited amendments to the classification and measurement requirements. The IASB is adding to the standard as it completes the various phases of its comprehensive project on financial instruments, and so it will eventually form a complete replacement for IAS 39 Financial Instruments: Recognition and measurement. IFRS 9 requires financial assets to be classified into two measurement categories: fair value and amortised cost. Classification will depend on an entity's business model and the characteristics of contractual cash flow of the financial instrument. Although there are expected to be significant changes to the classification and presentation of financial instruments by the Group, there is not expected to be a significant impact on net assets. Retrospective application is required and IFRS 9 is anticipated to be effective for annual periods beginning on or after 1 January 2018. The Group continues to monitor developments regarding IFRS 9 and will provide an impact assessment once the IASB has completed the project subject to endorsement by the EU.

-      The Group will continue to measure all equity investments at fair value with an irrevocable option to recognise through equity fair value gains and losses on equity investments that are not held for trading. However, gains and losses recognised through equity cannot be subsequently recycled to comprehensive income on impairment or disposal of the investments as is the case for equity investments currently classified as available-for-sale.

4) Significant accounting policies

The following principal accounting policies have been applied consistently where applicable to all years presented in dealing with items which are considered material in relation to the Group and Company financial statements, unless otherwise stated. Certain limited presentational amendments were made to prior year disclosure notes to enhance consistency with current year disclosures.

Basis of consolidation

The consolidated financial statements of the Group comprise the financial statements of the Company and its subsidiaries as at 30 June 2014. Subsidiaries are those entities, including investment funds, over which the Company has the power, directly or indirectly, to govern the financial and operating policies so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control is transferred to the Group until the date that control ceases. Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. The results of subsidiaries acquired during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition.

Based on their nature, the interests of third-parties in funds that are consolidated (consolidated funds) are classified as liabilities and appear as 'Third-party interests in consolidated funds' on the Group's balance sheet.

The Group has an Employee Benefit Trust (EBT) that acts as an agent for the purpose of the employee share-based compensation plans. Accordingly, the EBT is included within the Group and Company financial statements.

Associates and joint ventures

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 recognised 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.

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 currency of the primary economic environment in which the entity operates; the functional currency.

Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currency 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. However, foreign currency differences arising from the translation of the following items are recognised in other comprehensive income:

-      available-for-sale equity instruments; and

-      qualifying cash flow hedges to the extent that the hedge is effective.

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 only part of its interest in a subsidiary that includes a foreign operation while retaining control, then 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, then 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.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequently, changes to the fair value of the contingent consideration that is deemed to be a liability will be recognised in accordance with IAS 39 in comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured and settlement is accounted for within equity.

If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree's employees (acquiree's awards) and relate to past services, then all or a portion
of the amount of the acquirer's replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on market-based value of the replacement awards compared with the market-based value of the acquiree's awards and the extent to which the replacement awards relate to pre-combination service.

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 are 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 are amortised, if appropriate, over their useful lives which have been assessed as being between 31 months and eight years.

Non-controlling interests (NCI)

NCI are measured at their proportionate share of the acquiree's identifiable net assets at the acquisition date. 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 is 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 is 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.

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 contractual right to benefit from providing investment management services and are charged as the related revenue is recognised.

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 IAS 39 Financial instruments: recognition and measurement and IFRS 5 Non-current assets held-for-sale and discontinued operations.

Financial assets

The Group classifies its financial assets into the following categories: financial assets held-for-sale, investment securities, fair value through profit or loss investments, available-for-sale financial assets and non-current financial assets held-for-sale.

The Group may, from time to time, invest in funds where an Ashmore Group subsidiary is the investment manager or an adviser (seeding). 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 non-current financial assets held-for-sale in accordance with IFRS 5. The Group recognises 100% of the investment in the fund as a 'held-for-sale' asset and the interest held by other parties as a 'liability held-for-sale'. Where control is not deemed to exist, and the assets are readily realisable, they are recognised as financial assets at fair value through profit or loss in accordance with IAS 39. Where the assets are not readily realisable, they are recognised as non-current asset investments. 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

Investment securities represent listed securities, other than derivatives, held by consolidated funds. These securities are held at fair value with gains and losses recognised through the consolidated statement of comprehensive income.

Non-current financial assets held-for-sale

Non-current financial assets held-for-sale are measured at the lower of their carrying amount and fair value less costs to sell except where measurement and re-measurement is outside the scope of IFRS 5. Where investments that have initially been recognised as non-current financial assets held-for-sale, because the Group has been deemed as holding a controlling stake, are subsequently disposed of or diluted such that the Group's holding is no longer deemed a controlling stake, the investment will subsequently be classified as fair value through profit or loss investments in accordance with IAS 39. Subsequent movements will be recognised in accordance with the Group's accounting policy for the newly adopted classification.

Available-for-sale financial assets

Available-for-sale financial assets include readily realisable interests of less than 50% in seeded funds that are either allocated specifically to this category or cannot be assigned to any other category. They are carried at fair value and changes in fair value are recognised in other comprehensive income, until the asset is disposed of or impaired, at which time the cumulative gain or loss previously recognised in other comprehensive income is included in profit for the year as part of comprehensive income. Dividend income and impairment losses are recognised in the consolidated statement of comprehensive income. With effect from 1 July 2013, the Group changed its accounting policy to classify new readily realisable interests of less than 50% in seeded funds as fair value through profit or loss investments, and not as available-for-sale financial assets.

Financial assets designated as fair value through profit or loss (FVTPL)

Financial assets designated as FVTPL include certain readily realisable interests of less than 50% in seeded funds, non-current asset investments and derivatives. The Group designates financial assets as FVTPL when:

-      the financial assets are managed, evaluated and reported internally on a fair value basis; and

-      the classification at fair value eliminates or significantly reduces an accounting mismatch which would otherwise arise.

From the date the financial asset is designated as FVTPL 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) FVTPL investments

As noted under available-for-sale financial assets above, the Group changed its accounting policy with effect from 1 July 2013 to classify new readily realisable interests of less than 50% in seeded funds as FVTPL investments with fair value changes being directly recognised through the consolidated statement of comprehensive income. Fair value is assessed by taking account of the extent to which potential dilution of gains or losses may arise as a result of additional investors subscribing to the fund where the final close of a fund has not occurred.

(ii) Non-current asset investments

Non-current asset investments include closed-end funds which are designated as FVTPL. They are held at fair value with changes in fair value being recognised through the consolidated statement of comprehensive income. Fair value is assessed by taking account of the extent to which potential dilution of gains or losses may arise as a result of additional investors subscribing to the fund where the final close of a fund has not occurred.

(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 and subsequently re-measured 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.

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. Impairment losses with respect to the estimated irrecoverable amount are recognised through the statement of comprehensive income when there is appropriate evidence that trade and other receivables are impaired. However, if a longer-term receivable carries no interest, the fair value is estimated as the present value of all future cash payments or receipts discounted using the Group's weighted average cost of capital. The resulting adjustment is recognised as interest expense or interest income. Subsequent to initial recognition these assets are measured at amortised cost less any impairment.

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 with an original maturity of three months or less.

Financial liabilities

The Group classifies its financial liabilities into the following categories: non-current financial liabilities held-for-sale, financial liabilities designated as FVTPL and financial liabilities at amortised cost.

Non-current financial liabilities held-for-sale

Non-current financial liabilities represent interests held by other parties in funds in which the Group recognises 100% of the investment in the fund as a held-for-sale financial asset. These liabilities are carried at fair value with gains or losses recognised in the statement of comprehensive income within finance income or expense.

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.

Other financial liabilities

Other financial liabilities including trade and other payables are subsequently measured at amortised cost using the effective interest rate method.

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 assumptions 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, 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 for which sufficient and reliable data is available. 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 open-ended funds are valued on the basis of the last available NAV 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 cash flow hedge accounting when the transactions meet 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

General

At each reporting date, the carrying amounts of the Group's assets are reviewed to assess whether there is any objective evidence of impairment in the value of financial assets classified as either available-for-sale or trade and other receivables. Impairment losses are recognised if an event has occurred which will have an adverse impact on the expected future cash flows of an asset and the expected impact can be reliably estimated. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.

The recoverable amount of an asset is the higher of an asset's fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using the Group's weighted average cost of capital. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Impairment losses on available-for-sale financial assets are measured as the difference between cost and the current fair value. Where there is evidence that the available-for-sale financial asset is impaired, the cumulative loss that had been previously recognised in other comprehensive income is reclassified from the available-for-sale fair value reserve and recognised in the consolidated statement of comprehensive income.

Impairment losses in respect of assets other than goodwill are measured as the difference between the carrying amount of the financial asset and the present value of estimated cash flows discounted at the asset's original effective interest rate. Such impairment losses are recognised in the consolidated statement of other comprehensive income and are recognised against the carrying amount of the impaired asset on the consolidated statement of financial position. Interest on the impaired asset continues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset.

Subsequent increases in fair value of previously impaired available-for-sale financial assets are reported as fair value gains in the available-for-sale fair value reserve through other comprehensive income and not separately identified as an impairment reversal.

For all other assets other than goodwill, if in a subsequent year, the amount of the estimated impairment loss decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed, but is limited to the extent that the value of the asset may not exceed the original carrying amount that would have been determined, net of depreciation or amortisation, had no impairment occurred.

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 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 is not reversed.

Revenue

Revenue comprises management fees, performance fees and other revenue. Revenue is recognised in the statement of comprehensive income as and when the related services are provided. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Specific revenue recognition policies are:

Management fees

Management fees net of rebates are accrued over the period for which the service is provided. Where management fees are received in advance these are recognised over the period of the provision of the asset management service.

Performance fees

Performance fees net of rebates relate to the performance of funds managed during the period and are recognised when the quantum
of the fee can be estimated reliably and it is probable that the fee will crystallise. This is usually at the end of the performance period or upon early redemption by a client.

Other revenue

Other revenue includes transaction, structuring and administration fees, and reimbursement by funds of costs incurred by the Group. This revenue is recognised when the related services are provided.

Distribution costs

Distribution costs are cost of sales payable to third-parties and are recognised over the period for 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.

Operating leases

Payments payable under operating leases are recognised in the statement of comprehensive income on a straight-line basis over the term of the lease. Lease incentives received are recognised on a straight-line basis over the lease term and are recorded as a reduction in premises costs.

Finance income and expense

Finance income includes interest receivable on the Group's cash and cash equivalents, realised gains on available-for-sale financial assets and both realised and unrealised gains on held-for-sale assets and investments measured at FVTPL.

Finance income also includes adjustments in relation to the Group's contingent consideration liabilities related to acquisitions and charges in respect of unwinding of net present value discounts.

Finance expense includes the unwind of the discounts applied to contingent consideration liabilities on the Group's balance sheet using the effective interest method, realised losses on available-for-sale financial assets and both realised and unrealised losses on held-for-sale assets and investments measured at FVTPL.

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 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.

Treasury shares

Treasury shares are recognised in equity and are measured at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from the sale and original cost being taken to 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 relate 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 location of the Group's non-current assets at year end other than financial instruments, deferred tax assets and post-employment benefit assets is shown in the table below. Disclosures relating to revenue are in note 6.

Analysis of non-current assets by geography

	2014 £m	2013 £m
United Kingdom	14.3	16.9
United States	70.1	82.6
Other	0.5	0.9

6) Revenue

Management fees are accrued throughout the year in line with prevailing levels of assets under management 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 (FY2012/13: 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

	2014 £m	2013 £m
United Kingdom earned revenue	266.2	320.1
United States earned revenue	22.2	27.9
Other revenue	5.7	7.6

7) Foreign exchange

The foreign exchange rates which had a material impact on the Group's results are the US dollar, the Brazilian real and Indonesian rupiah.

	Closing rate as at 30 June 2014	Closing rate as at 30 June 2013	Average rate year ended 30 June 2014	Average rate year ended 30 June  2013
US dollar	1.7106	1.5213	1.6281	1.5690
Brazilian real	3.7854	3.3907	3.7250	3.2216
Indonesian rupiah	20,219	15,258	18,618	15,183

Foreign exchange differences arose as shown below.

	2014 £m	2013 £m
Net realised and unrealised hedging gains/(losses)	3.5	(1.2)
Translation gains/(losses) on non-Sterling denominated monetary assets and liabilities	(30.1)	5.9
Total foreign exchange (losses)/gains	(26.6)	4.7

8) Finance income and expense

	2014 £m	2013 £m
Finance income
Interest income	2.7	3.2
Net gains on disposal of available-for-sale financial assets	2.5	2.1
Net realised gains on seed capital investments measured at fair value	3.0	7.4
Net unrealised gains on seed capital investments measured at fair value	-	3.1
Release of contingent consideration	0.5	10.8
Total finance income	8.7	26.6
Finance expense
Net unrealised losses on seed capital investments measured at fair value	(6.2)	-
Unwinding of discount on contingent consideration	-	(0.9)
Total finance expense	(6.2)	(0.9)
Net finance income	2.5	25.7

Included within finance income is £0.5 million (FY2012/13: £10.8 million) in relation to the downward adjustment of the Group's contingent consideration liabilities.

9) Personnel expenses

Personnel expenses during the year comprised the following:

	2014 £m	2013 £m
Wages and salaries	19.6	20.0
Performance-related cash bonuses	15.0	25.9
Share-based payments	23.2	28.4
Social security costs	5.1	4.2
Pension costs	1.2	1.2
Other costs	2.0	2.6
Total personnel expenses	66.1	82.3

Personnel expenses in respect of the year ended 30 June 2014 include an amount of £0.6 million (FY2012/13: £0.6 million) that has been waived by Directors and employees in earlier periods with an equivalent amount paid to charity in the financial year to 30 June 2014.

Number of employees

The number of employees of the Group (including Directors) during the reporting year, all categorised as investment management personnel, was as follows:

	Average for the year ended 30 June 2014 Number	Average for the year  ended 30 June 2013 Number	At 30 June 2014 Number	At 30 June 2013 Number
Total employees	290	280	291	291

There are retirement benefits accruing to two Directors under a defined contribution scheme (FY2012/13: two).

10) Share-based payments

The total share-based payments-related cost recognised by the Group in the statement of comprehensive income is shown below:

Group	2014 £m	2013 £m
Omnibus Plan	19.2	24.8
Ashmore Equities Investment Management operating agreement	0.3	0.3
Phantom Bonus Plan	0.1	-
Total related to compensation awards	19.6	25.1
Related to acquisition of Ashmore Equities Investment Management (US) L.L.C.	3.6	3.3
Total share-based payments expense	23.2	28.4

The total expense recognised for the year in respect of equity-settled share-based payment transactions was £23.8 million (FY2012/13:
£29.0 million).

The Ashmore First Discretionary Share Option Scheme (Option Scheme)

The Option Scheme was set up in October 2000. Options issued under the Option Scheme typically have a life of ten years and vest after five years from date of grant. The pro rata proportion of the fair value of options at each reporting year end has been accounted for on an equity-settled basis. No further options will be issued under the Option Scheme. All outstanding options are fully vested.

Share options outstanding under the Option Scheme were as follows:

Group and Company	2014  Number of options	Weighted average exercise price pence	2013  Number of options	Weighted average exercise price pence
At the beginning of the year	503,750	35.11	1,898,221	33.20
Exercised	-	-	(1,394,471)	32.51
Forfeited	-	-	-	-
Options outstanding at year end	503,750	35.11	503,750	35.11
Options exercisable	503,750	35.11	503,750	35.11

No share options were exercised during the year. The weighted average share price on the date options were exercised during the prior year was 363.48p.

Weighted average remaining contractual life of outstanding options

Group and Company	At 30 June 2014	At 30 June 2013
Outstanding options	503,750	503,750
Weighted average exercise price	35.11p	35.11p
Weighted average remaining contracted life (years)	1.63	2.63

 

Range of exercise prices for share options outstanding at the end of the year

Group and Company Exercise price per share (p)	Exercise periods	2014 Number	2013 Number
10.00 - 20.00	9 December 2010 - 8 December 2015	328,750	328,750
20.00 - 30.00	27 April 2011 - 26 April 2016	125,000	125,000
170.00 - 180.00	8 December 2011 - 7 December 2016	50,000	50,000
		503,750	503,750

There were no new share options granted during the year ended 30 June 2014 (FY2012/13: none).

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. These elements can be used singly or in combination. 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 share-based payments relating to the Omnibus Plan represent the combined cash and equity-settled payments.

Total expense by year awards were granted

Group and Company Year of grant	2014 £m	2013 £m
2008	-	1.0
2009	0.9	1.0
2010	1.1	1.8
2011	2.9	3.3
2012	3.2	1.8
2013	(0.3)	15.9
2014	11.4	-
	19.2	24.8

Awards outstanding under the Omnibus Plan were as follows:

i) Equity-settled awards

Group and Company	2014 Number of shares subject to awards	2014 Weighted average share price	2013 Number of shares subject to awards	2013  Weighted average share price
Restricted share awards
At the beginning of the year	18,070,806	£2.98	15,877,630	£2.90
Granted	5,316,273	£3.83	4,836,236	£3.29
Vested	(4,288,564)	£3.88	(2,333,276)	£3.72
Forfeited	(1,102,253)	£3.52	(309,784)	£3.45
Awards outstanding at year end	17,996,262	£3.50	18,070,806	£2.98
Bonus share awards
At the beginning of the year	5,134,098	£3.10	4,906,912	£3.01
Granted	1,918,121	£3.83	1,430,420	£3.29
Vested	(1,388,760)	£3.77	(1,203,234)	£3.80
Forfeited	(3,645)	£3.25	-	-
Awards outstanding at year end	5,659,814	£3.55	5,134,098	£3.10
Matching share awards
At the beginning of the year	5,134,098	£3.10	4,906,912	£3.01
Granted	1,918,121	£3.83	1,430,420	£3.29
Vested	(941,429)	£3.91	(1,162,885)	£3.81
Forfeited	(450,976)	£3.47	(40,349)	£2.95
Awards outstanding at year end	5,659,814	£3.55	5,134,098	£3.10
Total	29,315,890	£3.52	28,339,002	£3.02

 

ii) Cash-settled awards

Group and Company	2014 Number of shares subject to awards	2014 Weighted average share price	2013 Number of shares subject to awards	2013  Weighted average share price
Restricted share awards
At the beginning of the year	2,205,318	£3.49	1,806,068	£3.54
Granted	70,423	£3.83	409,405	£3.29
Vested	(11,491)	£3.24	(1,985)	£3.31
Forfeited	(63,960)	£3.25	(8,170)	£3.94
Awards outstanding at year end	2,200,290	£3.50	2,205,318	£3.49
Bonus share awards
At the beginning of the year	1,596,195	£3.50	1,300,075	£3.55
Granted	35,211	£3.83	296,120	£3.29
Vested	(51,634)	£3.24	-	-
Forfeited	-	-	-	-
Awards outstanding at year end	1,579,772	£3.50	1,596,195	£3.50
Matching share awards
At the beginning of the year	1,596,195	£3.50	1,300,075	£3.55
Granted	35,211	£3.83	296,120	£3.29
Vested	(8,618)	£3.24	-	-
Forfeited	(43,016)	£3.24	-	-
Awards outstanding at year end	1,579,772	£3.50	1,596,195	£3.50
Total	5,359,834	£3.50	5,397,708	£3.50

iii) Total awards

Group and Company	2014  Number of shares subject to awards	2014 Weighted average share price	2013 Number of shares subject to awards	2013  Weighted average share price
Restricted share awards
At the beginning of the year	20,276,124	£3.04	17,683,698	£2.96
Granted	5,386,696	£3.83	5,245,641	£3.29
Vested	(4,300,055)	£3.88	(2,335,261)	£2.72
Forfeited	(1,166,213)	£3.51	(317,954)	£3.46
Awards outstanding at year end	20,196,552	£3.50	20,276,124	£3.04
Bonus share awards
At the beginning of the year	6,730,293	£3.19	6,206,987	£3.12
Granted	1,953,332	£3.83	1,726,540	£3.29
Vested	(1,440,394)	£3.75	(1,203,234)	£3.80
Forfeited	(3,645)	£3.25	-	-
Awards outstanding at year end	7,239,586	£3.54	6,730,293	£3.19
Matching share awards
At the beginning of the year	6,730,293	£3.19	6,206,987	£3.12
Granted	1,953,332	£3.83	1,726,540	£3.29
Vested	(950,047)	£3.90	(1,162,885)	£3.81
Forfeited	(493,992)	£3.45	(40,349)	£2.95
Awards outstanding at year end	7,239,586	£3.54	6,730,293	£3.19
Total	34,675,724	£3.52	33,736,710	£3.10

The fair value of awards granted under the Omnibus Plan is determined by the average Ashmore Group plc closing share price for the five business days prior to grant.

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 release 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 release 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 consolidated balance sheet is £7.1 million (30 June 2013: £12.0 million) of which £nil (30 June 2013: £nil) relates to vested awards.

 

The Approved Company Share Option Plan (CSOP)

The CSOP was also introduced prior to the Company listing in October 2006 and is an option scheme providing for the grant of market value options to employees with the aggregate value of outstanding options not exceeding £30,000 per employee. The CSOP qualifies as a UK tax approved company share option plan and approval thereto has been obtained from HMRC. To date, there have been no awards made under
the CSOP.

Other arrangements

Ashmore Equities Investment Management (US) L.L.C. (AEIM) operating agreement

Under the terms of AEIM's operating agreement, certain employees are eligible to receive part of their variable compensation in the form of partnership units. These awards, which typically vest five years from the date of grant depending on the satisfaction of service conditions, are accounted for as equity-settled share-based payments. The fair value of awards granted is based on the equity valuation of the subsidiary at the date of grant. Upon vesting, the holders are entitled to receive units in the subsidiary.

Share awards outstanding at year end under the operating arrangement were as follows:

Group	2014 Number of shares subject to awards	2014 Weighted average share price (US dollars)	2013 Number of shares subject to awards	2013 Weighted average share price (US dollars)
At the beginning of the year	54,352	$32.05	-	-
Granted	31,187	$31.66	54,352	$32.05
Vested	-	-	-	-
Forfeited	(18,250)	$32.00	-	-
Awards outstanding at year end	67,289	$31.88	54,352	$32.05

Phantom Bonus Plan

In August 2013, the Phantom Bonus Plan, a cash-settled share-based payment plan, was set up to provide long-term incentives to certain employees. The units typically vest after five years from date of grant, contingent upon continued employment. Units awarded under the plan carry no voting rights. The fair value of units granted under the plan is determined with reference to the equity valuation of the underlying employing entity.

Awards outstanding at year end under the Phantom Bonus Plan were as follows:

Group	2014 Number of shares subject to awards	2014 Weighted average share price (US dollars)	2013 Number of shares subject to awards	2013 Weighted average share price (US dollars)
At the beginning of the year	13,229	$32.02	-	-
Granted	12,609	$31.66	13,229	$32.02
Vested	-	-	-	-
Lapsed	(3,797)	$31.93	-	-
Awards outstanding at year end	22,041	$31.85	13,229	$32.02

As at 30 June 2014, the related liability reported within trade and other payables on the consolidated and Company balance sheet is
£0.2 million of which £nil relates to vested awards (FY2012/13: £0.1 million of which £nil relates to vested awards).

Prior period acquisition of AEIM

At the time of the acquisition of AEIM in May 2011, employees and management held unvested shares representing 17.9% of its partnership shares. These awards, which vest after five years depending on the satisfaction of service conditions, are accounted for as equity-settled share-based payments in accordance with IFRS 2 Share-based payment which results in an annual charge to the statement of comprehensive income during the period of vesting. Upon vesting, the holders are entitled to receive shares in AEIM which may be exchanged for shares in Ashmore Group plc or cash at the discretion of the Group. The grant date fair value was based on the intrinsic value proportionate with the value implied from the purchase consideration paid by the Group to acquire AEIM.

During the year, no awards were granted (FY2012/13: none), none vested (FY2012/13: 5,463 awards vested) and 11,500 awards were forfeited (FY2012/13: 71,587 awards were forfeited). 305,900 awards (30 June 2013: 317,400 awards) are outstanding as at the year end.

11) Other expenses

Other expenses consist of the following:

	2014 £m	2013 £m
Travel	4.9	6.0
Professional fees	4.3	2.9
Information technology and communications	5.6	5.2
Deferred acquisition costs (note 17)	0.1	1.7
Amortisation of intangible assets (note 15)	3.8	5.1
Impairment of intangible assets (note 15)	-	11.0
Operating leases	3.2	3.5
Premises-related costs	1.4	1.2
Insurance	0.9	0.9
Auditors' remuneration (see below)	0.9	1.1
Depreciation of property, plant and equipment (note 16)	1.1	2.4
Other expenses	5.6	3.9
	31.8	44.9

Auditors' remuneration

	2014 £m	2013 £m
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	0.3	0.3
Fees for non-audit services:
-   Fees payable to the Company's auditor and its associates for tax services	0.2	0.3
-   Fees payable to the Company's auditor and its associates for other services	0.2	0.3
	0.9	1.1

12) Taxation

Analysis of tax charge for the year

	2014 £m	2013 £m
Current tax
UK corporation tax on profits for the year	30.7	56.7
Overseas corporation tax charge	4.7	3.9
Adjustments in respect of prior years	0.3	-
	35.7	60.6
Deferred tax
Origination and reversal of temporary differences (see note 19)	(0.1)	(5.2)
Adjustments in respect of prior year	(0.2)	-
Effect of changes in corporation tax rates	1.5	0.6
Tax expense for the year	36.9	56.0

 

Factors affecting tax charge for the year

	2014 £m	2013 £m
Profit before tax	170.3	257.6
Profit on ordinary activities multiplied by the blended UK tax rate of 22.5% (FY2012/13: 23.75%)	38.3	61.2
Effects of:
Non-deductible expenses	8.4	10.6
Deduction in respect of vested shares/exercised options (Part 12, Corporation Tax Act 2009)	(3.9)	(4.1)
Deferred tax arising from origination and reversal of temporary differences	(0.1)	(5.2)
Different rate of taxes on overseas profits	(0.1)	(1.3)
Write-off of contingent consideration	-	(2.6)
Non-taxable income	(4.9)	(2.2)
Tax relief on amortisation and impairment of goodwill and intangibles	(1.5)	(1.7)
Effect of deferred tax balance from changes in the UK corporation tax rate	1.5	0.6
Other items	(0.9)	0.7
Adjustments in respect of prior years	0.1	-
Tax expense for the year	36.9	56.0

Non-deductible expenses include the tax impact of non-deductible IFRS 2 accounting charges in respect of share-based payments of £5.2 million. Non-taxable income relates to unrealised foreign exchange differences arising on consolidation of the Group's US subsidiaries.

Charge recognised in equity/other comprehensive income

	2014 £m	2013 £m
Deferred tax on share-based payments	-	0.7
	-	0.7

A reduction to the main rate of UK corporation tax from 23% to 21% was enacted in Finance Act 2013 and became effective from 1 April 2014. The rate is set to fall to 20% from 1 April 2015 - this rate reduction was also enacted in Finance Act 2013. The effect of the rate reduction to 21% has been reflected in the figures set out above and the 20% rate used in the calculation of the UK deferred tax assets and liabilities.

13) Earnings per share

Basic earnings per share is calculated by dividing the profit after tax for the financial period attributable to equity holders of the parent  of £130.8 million (FY2012/13: £202.2 million) by the weighted average number of ordinary shares in issue during the period, excluding  own shares.

Diluted earnings per share is calculated based on basic earnings per share adjusted for all 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.

Reconciliation of the weighted average number of shares used in calculating basic and diluted earnings per share is shown below.

	2014 Number of ordinary shares	2013 Number of ordinary shares
Weighted average number of ordinary shares used in the calculation of basic earnings per share	677,970,089	674,777,956
Effect of dilutive potential ordinary shares - share options/awards	31,034,197	30,328,790
Weighted average number of ordinary shares used in the calculation of diluted earnings per share	709,004,286	705,106,746

14) Dividends

Dividends paid in the year

Company	2014 £m	2013 £m
Final dividend for FY2012/13 - 11.75p (FY2011/12: 10.75p)	81.9	75.0
Interim dividend for FY2013/14 - 4.45p (FY2012/13: 4.35p)	30.7	30.2
	112.6	105.2

In addition, the Group paid £6.6 million (FY2012/13: £5.7 million) of dividends to non-controlling interests.

Dividends declared/proposed in respect of the year

Company	2014 pence	2013 pence
Interim dividend declared per share	4.45	4.35
Final dividend proposed per share	12.00	11.75
	16.45	16.10

On 10 September 2014 the Board proposed a final dividend of 12.00p per share for the year ended 30 June 2014. 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 which qualify to receive a dividend, the total amount payable would be £83.6 million.

15) Goodwill and intangible assets

Group	Goodwill £m	Fund management relationships £m	Brand name £m	Other intangible assets £m	Total £m
Cost - (at original exchange rate)
At 30 June 2012, 30 June 2013 and 30 June 2014	57.5	39.5	1.8	2.6	101.4
Accumulated amortisation and impairment
At 30 June 2012	-	(5.5)	(0.2)	(2.2)	(7.9)
Amortisation charge for year	-	(4.8)	-	(0.3)	(5.1)
Impairment charge for the year	-	(9.4)	(1.6)	-	(11.0)
At 30 June 2013	-	(19.7)	(1.8)	(2.5)	(24.0)
Amortisation charge for the year	-	(3.5)	-	(0.1)	(3.6)
At 30 June 2014	-	(23.2)	(1.8)	(2.6)	(27.6)
Net book value
At 30 June 2012	60.0	35.8	1.7	0.6	98.1
Accumulated amortisation and impairment movement for the year	-	(14.2)	(1.6)	(0.3)	(16.1)
Foreign exchange revaluation through reserves*	1.7	0.7	(0.1)	-	2.3
At 30 June 2013	61.7	22.3	-	0.3	84.3
Accumulated amortisation for the year	-	(3.5)	-	(0.3)	(3.8)
Foreign exchange revaluation through reserves*	(6.0)	(2.3)	-	-	(8.3)
At 30 June 2014	55.7	16.5	-	-	72.2

* FX revaluation through reserves is a result of the retranslation of US dollar-denominated intangibles and goodwill.

Company	Goodwill £m
Cost
At the beginning and end of the year	4.1
Net carrying amount at 30 June 2013 and 2014	4.1

Goodwill

The Group's goodwill balance relates principally to the acquisition of AEIM in May 2011.

The Company's goodwill balance relates to the acquisition of the business from ANZ in 1999.

The annual impairment review of goodwill was undertaken for the year ending 30 June 2014. The Group consists of a single cash generating unit for the purpose of assessing the carrying value of goodwill. In performing the impairment review, management prepares a calculation of the recoverable amount of goodwill and compares this to the carrying value. The recoverable amount was based on a fair value less costs to sell calculation using the Company's year end share price. Based on management's assessment as at 30 June 2014, the recoverable amount was in excess of the carrying value of goodwill and no impairment was implied. No impairment losses have been recognised in the current or preceding years.

Fund management relationships

Intangible assets comprise fund management relationships related to profit expected to be earned from clients of AEIM.

An annual impairment review of the fund management relationships was undertaken for the year ending 30 June 2014. The recoverable amount was derived from the cumulative pre-tax net earnings anticipated to be generated over the remaining useful economic life, discounted to present value using the Group's weighted average cost of capital of 13.0% per annum. Cumulative net earnings associated with the fund management relationships intangible asset were derived from the annual operating profit contribution that would arise as a result of the remaining fund management relationships, adjusted for investment performance and investor attrition.

The fund management relationships intangible asset was determined not to be impaired as the recoverable amount was higher than the carrying value as at 30 June 2014. Accordingly, no impairment charge was recognised during the year (FY2012/13: £11.0 million impairment was charged and included within other expenses in the Group's consolidated statement of comprehensive income).

The remaining amortisation period for fund management relationships is five years (30 June 2013: six years).

16) Property, plant and equipment

Group	2014 Fixtures, fittings and equipment £m	2013 Fixtures, fittings and equipment £m
Cost
At the beginning of the year	11.1	10.4
Additions	0.4	1.9
Foreign exchange revaluation	(0.4)	-
Disposals	(5.3)	(1.2)
At the end of the year	5.8	11.1
Accumulated depreciation
At the beginning of the year	7.4	6.2
Depreciation charge for the year	1.1	2.4
Foreign exchange revaluation	(0.4)	-
Disposals	(5.3)	(1.2)
At the end of the year	2.8	7.4
Net book value at 30 June	3.0	3.7

Company	2014 Fixtures, fittings and equipment £m	2013 Fixtures, fittings and equipment £m
Cost
At the beginning of the year	7.5	6.8
Additions	0.4	0.7
Disposals	(5.2)	-
At the end of the year	2.7	7.5
Accumulated depreciation
At the beginning of the year	6.1	4.3
Depreciation charge for year	0.3	1.8
Disposals	(5.2)	-
At the end of the year	1.2	6.1
Net book value at 30 June	1.5	1.4

17) Deferred acquisition costs

Group	2014 £m	2013 £m
Cost
At the beginning of the year	11.9	14.3
Deferred acquisition costs recovered	(0.5)	(2.4)
At the end of the year	11.4	11.9
Accumulated charge
At the beginning of the year	11.3	9.6
Charge for the year (note 11)	0.1	1.7
At the end of the year	11.4	11.3
Carrying value at the end of the year	-	0.6

The deferred acquisition costs shown above are in respect of the launch of Ashmore Global Opportunities Limited (AGOL), a publicly listed closed-ended investment company incorporated in 2007, and are being charged to the Group's statement of comprehensive income over seven years.

During the year, the Group recovered £0.5 million (FY2012/13: £2.4 million) of deferred acquisition costs related to the managed wind down of AGOL which was proposed and approved by AGOL shareholders in March 2014. The wind down entitled the Group to receive a reimbursement of certain launch costs which were borne at the time of AGOL's IPO in 2007.

18) Trade and other receivables

	Group		Company
	2014 £m	2013 £m	2014 £m	2013 £m
Current
Trade debtors	60.7	71.0	2.0	1.8
Prepayments	2.4	2.8	1.9	1.7
Loans due from subsidiaries	-	-	249.6	249.5
Amounts due from subsidiaries	-	-	2.8	2.0
Other receivables	0.9	3.5	0.6	2.8
	64.0	77.3	256.9	257.8
Non-current
Loans due from subsidiaries	-	-	-	18.9
	-	-	-	18.9
Total trade and other receivables	64.0	77.3	256.9	276.7

Group trade debtors include all billed and unbilled management fees due to the Group at 30 June 2014 in respect of investment management services provided to that date.

19) Deferred taxation

Deferred tax assets and liabilities recognised by the Group and Company at year end are attributable to the following:

	2014			2013
Group	Other temporary differences £m	Share-based payments £m	Total £m	Other temporary differences £m	Share-based payments £m	Total £m
Deferred tax assets	9.4	11.9	21.3	7.7	13.3	21.0
Deferred tax liabilities	(4.5)	-	(4.5)	(3.0)	-	(3.0)
	4.9	11.9	16.8	4.7	13.3	18.0

	2014			2013
Company	Other temporary differences £m	Share-based payments £m	Total £m	Other temporary differences £m	Share-based payments £m	Total £m
Deferred tax assets	0.4	11.9	12.3	0.4	13.3	13.7

Movement of deferred tax balances

The movement in the deferred tax balances between the balance sheet dates has been reflected in equity or the statement of comprehensive income as follows:

Group	Other temporary differences £m	Share-based payments £m	Total £m
At 1 July 2012	0.4	13.7	14.1
Credited/(charged) to the consolidated statement of comprehensive income	4.3	0.3	4.6
Credited/(charged) to equity	-	(0.7)	(0.7)
At 30 June 2013	4.7	13.3	18.0
Credited/(charged) to the consolidated statement of comprehensive income	0.1	(1.3)	(1.2)
At 30 June 2014	4.8	12.0	16.8

Company	Other temporary differences £m	Share-based payments £m	Total £m
At 1 July 2012	-	13.7	13.7
Credited/(charged) to the statement of comprehensive income	0.4	0.3	0.7
Credited/(charged) to equity	-	(0.7)	(0.7)
At 30 June 2013	0.4	13.3	13.7
Credited/(charged) to the statement of comprehensive income	(0.1)	(1.4)	(1.5)
At 30 June 2014	0.3	11.9	12.2

20) Fair value of financial instruments

The Group has an established control framework with respect to the measurement of fair values. This framework includes a valuation team that has overall responsibility for all significant fair value measurements. The valuation team regularly reviews significant inputs and valuation adjustments. If third-party information is used to measure fair value, then the valuation team 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 hierarchy that reflects the significance of inputs used in making the measurements.

-      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.

-      Level 3: Valuation techniques use significant unobservable inputs. This fair value measure relates to the valuation of contingent consideration liabilities.

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 re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The fair value hierarchy of financial instruments which are carried at fair value at year end is summarised below:

	2014				2013
	Level 1 £m	Level 2 £m	Level 3 £m	Total £m	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Financial assets
Investment securities	47.4	23.3	-	70.7	40.7	9.0	-	49.7
Non-current financial assets held-for-sale	-	39.1	-	39.1	-	104.9	-	104.9
Fair value through profit or loss investments	-	25.3	-	25.3	-	-	-	-
Available-for-sale financial assets	0.8	47.7	-	48.5	0.4	55.2	-	55.6
Non-current asset investments	-	11.7	-	11.7	-	9.1	-	9.1
Derivative financial instruments	-	2.4	-	2.4	-	-	-	-
	48.2	149.5	-	197.7	41.1	178.2	-	219.3
Financial liabilities
Third-party interests in consolidated funds	9.1	4.4	-	13.5	9.0	3.8	-	12.8
Derivative financial instruments	-	-	-	-	-	2.1	-	2.1
Non-current financial liabilities held-for-sale	-	2.7	-	2.7	-	26.9	-	26.9
Contingent consideration	-	-	-	-	-	-	0.5	0.5
	9.1	7.1	-	16.2	9.0	32.8	0.5	42.3

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the year (FY2012/13: none).

During the year the Group reclassified £12.0 million of available-for-sale financial assets from Level 3 to Level 2. The assets relate to investments made during the year in closed-end private equity funds that are neither listed on any stock exchange nor traded on any regulated markets. The Group considered it is more appropriate to classify these investments within Level 2 as the valuation is based on the net asset values (NAVs) of the funds as provided by the administrator, without any adjustment for illiquidity and/or non-transferability.

Changes in Level 3 financial liabilities recognised at fair value on a recurring basis

		Contingent consideration liability £m
At 1 July 2013		(0.5)
Gains recognised in profit within finance income		0.5
At 30 June 2014		-

Valuation of Level 3 financial liabilities recognised at fair value on a recurring basis

The measurement of contingent liabilities classified within Level 3 is based primarily on the Group's own estimates and assumptions. The contingent consideration liability in connection with the acquisition of AEIM was written down to £nil during the year.

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 2014 and 2013.

21) Seed capital investments

Seed capital investments represent interests held by the Group in funds for which the Group is the investment manager to provide initial scale and facilitate marketing of the funds to third-party investors. The movements of seed capital investments and related items during the year are as follows:

Group	Net non-current financial assets held-for-sale £m	Available-for-sale financial assets £m	FVTPL investments £m	Investment securities (relating to consolidated funds) £m	Other (relating to consolidated funds)* £m	Third-party interests in consolidated funds £m	Non-current asset investments £m	Total £m
Carrying amount at 30 June 2012	34.8	54.6	-	60.6	3.8	(10.5)	5.6	148.9
Net transfers:
Held-for-sale to consolidated funds	(25.2)	-	-	29.3	0.7	(4.8)	-	-
Held-for-sale to available-for-sale	(4.8)	4.8	-	-	-	-	-	-
Consolidated funds to available-for-sale	-	23.6	-	(55.0)	(2.0)	33.4	-	-
Net purchases, disposals and fair value changes	73.2	(27.4)	-	14.8	0.7	(30.9)	3.5	33.9
Carrying amount at 30 June 2013	78.0	55.6	-	49.7	3.2	(12.8)	9.1	182.8
Net transfers:
Held-for-sale to consolidated funds	(40.6)	-	-	48.1	-	(7.5)	-	-
Held-for-sale to FVTPL investments	(12.0)	-	12.0	-	-	-	-	-
Available-for-sale to held-for-sale	2.7	(2.7)	-	-	-	-	-	-
Consolidated funds to FVTPL investments	-	-	16.5	(31.5)	0.2	14.8	-	-
Net purchases, disposals and fair value changes	8.3	(4.4)	(3.2)	4.4	5.3	(8.0)	2.6	5.0
Carrying amount at 30 June 2014	36.4	48.5	25.3	70.7	8.7	(13.5)	11.7	187.8

* Relates to cash and other assets in consolidated funds that are not investment securities.

a) Non-current assets and non-current liabilities held-for-sale

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 treated as held-for-sale and are recognised as financial assets and liabilities held-for-sale. During the year, nine funds (FY2012/13: six) were seeded in this manner, met the above criteria, and consequently the assets and liabilities of these funds were initially classified as held-for-sale.

The non-current assets and liabilities held-for-sale at 30 June 2014 were as follows:

	2014 £m	2013 £m
Non-current financial assets held-for-sale	39.1	104.9
Non-current financial liabilities held-for-sale	(2.7)	(26.9)
Seed capital investments classified as held-for-sale	36.4	78.0

Investments cease to be classified as held-for-sale when they are no longer controlled by the Group. A loss of control may happen either through sale of the investment and/or dilution of the Group's holding. When investments cease to be classified as held-for-sale they are classified as financial assets designated at FVTPL, effective from 1 July 2013 (FY2012/13: available-for-sale assets). Two such investments were transferred to FVTPL category during the year (FY2012/13: one was transferred to available-for-sale assets) after the Group reduced its interests following investment inflows from third parties. There was no impact on net assets or comprehensive income as a result of the reclassification.

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 held-for-sale, and will be consolidated line-by-line after considering the level of stake held and the extent to which consolidation of the fund on a line-by-line basis would be material to the presentation of the Group's financial statements. During the year, four such funds (FY2012/13: two) with an aggregate carrying amount of £40.6 million (FY2012/13: £25.2 million) were transferred to consolidated funds. There was no impact on net assets or comprehensive income as a result of the transfer.

Included within finance income are net losses of £10.7 million (FY2012/13: net gains of £9.3 million) in relation to held-for-sale investments.

As the Group considers itself to have one segment (refer to note 4), no additional segmental disclosure of held-for-sale assets or liabilities is applicable.

b) Available-for-sale financial assets

Available-for-sale financial assets at 30 June 2014 comprise equities held as follows:

	2014 £m	2013 £m
Equities listed on stock exchange	0.8	0.4
Equity funds	10.9	10.6
Debt funds	36.8	44.6
Seed capital classified as available-for-sale	48.5	55.6

c) FVTPL investments

FVTPL investments at 30 June 2014 comprise equities held in equity funds.

	30 June 2014 £m	30 June 2013 £m
Seed capital designated as FVTPL investments	25.3	-

Included within finance income are net gains of £4.4 million on the Group's FVTPL investments.

d) Consolidated funds

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. These funds are consolidated line-by-line.

	2014 £m	2013 £m
Investment securities	70.7	49.7
Cash and cash equivalents	6.3	1.6
Other	2.4	1.6
Third-party interests in consolidated funds	(13.5)	(12.8)
Consolidated seed capital investments	65.9	40.1

Investment securities include listed and unlisted equities and debt securities. Other includes trade receivables, trade payables and accruals.

Included within the consolidated statement of comprehensive income are net gains of £5.5 million (FY2012/13: net gains of £4.6 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:

	2014 £m	2013 £m
Finance income	1.8	1.6
Gains on investment securities	7.0	4.9
Change in third-party interests in consolidated funds	(2.3)	(1.2)
Other expenses	(1.0)	(0.7)
Net gains on consolidated funds	5.5	4.6

As of 30 June 2014, the Group's consolidated funds were domiciled in Brazil, Indonesia, Luxembourg and the United States.

e) Non-current asset investments

Non-current asset investments relate to the Group's holding in closed-end funds and are designated as FVTPL. Fair value is assessed by taking account of the extent to which potential dilution of gains or losses may arise as a result of additional investors subscribing to the fund where the final close of a fund has not occurred.

	2014 £m	2013 £m
Non-current asset investments	11.7	9.1

Included within finance income are net gains of £3.2 million (FY2012/13: net gains of £1.2 million) on the Group's non-current asset investments.

22) Financial instrument risk management

Group

The Group is subject to strategic, business, investment, operational and treasury risks throughout its business as discussed in the Business Review. 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 held-for-sale, available-for-sale, FVTPL or non-current asset investment 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.

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 conducts regular reviews of its capital requirements relative to its capital resources.

As the Group is regulated by the United Kingdom's Financial Conduct Authority (FCA), it is required to maintain appropriate capital and perform regular calculations of capital requirements. This includes development of an Internal Capital Adequacy Assessment Process (ICAAP), based upon the FCA's methodologies under the Capital Requirements Directive. An overview of the ICAAP can be found on the Group's website at www.ashmoregroup.com. The Group's Pillar 3 disclosures covering the year to 30 June 2014 indicated that the Group had excess capital of £465.7 million (year to 30 June 2013: surplus of £453.6 million) over the level of capital required to meet operational risks under a Pillar II assessment. The objective of the assessment is to check that the Group has adequate capital to manage identified risks and the process includes conducting stress tests to identify capital and liquidity requirements under different future scenarios including a potential downturn.

All regulated entities with the Group have complied with regulatory requirements and filings that apply in the jurisdictions they operate.

Equity, as referred to on the Group's balance sheet, is the capital for the business.

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 team. 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. The table below lists financial assets subject to credit risk.

	Notes	2014 £m	2013 £m
Investment securities	21	70.7	49.7
Non-current financial assets held-for-sale	21	39.1	104.9
Available-for-sale financial assets	21	48.5	55.6
Fair value through profit or loss investments	21	25.3	-
Derivative financial instruments		2.4	-
Trade and other receivables	18	64.0	77.3
Cash and cash equivalents		370.6	395.5
Total		620.6	683.0

Investment securities, derivative financial instruments, non-current financial assets held-for-sale, available-for-sale financial assets and FVTPL investments expose the Group to credit risk from various counterparties which is monitored and reviewed by the Group.

The Group's cash and cash equivalents, comprised of 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 2014 (30 June 2013: A- to AAAm).

All trade and other receivables are considered to be fully recoverable and none were overdue at year end (30 June 2013: none). 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, and, unless a client has withdrawn funds, there is an ongoing relationship between the Group and the client. There is no significant concentration of credit risk in respect of fees owing from clients.

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 inherent liquidity risk there is a liquidity policy within the Group to ensure that there is sufficient access to funds to cover all forecast committed requirements for the next 12 months.

The maturity profile of the Group's contractual undiscounted financial liabilities is as follows:

At 30 June 2014

	Within 1 year £m	1-5 years £m	More than 5 years £m	Total £m
Non-current liabilities held-for-sale	2.7	-	-	2.7
Third-party interests in consolidated funds	13.5	-	-	13.5
Current trade and other payables	69.4	-	-	69.4
	85.6	-	-	85.6

At 30 June 2013

	Within 1 year £m	1-5 years £m	More than 5 years £m	Total £m
Non-current liabilities held-for-sale	26.9	-	-	26.9
Third-party interests in consolidated funds	12.8	-	-	12.8
Derivative financial instruments	2.1	-	-	2.1
Non-current trade and other payables	-	-	-	0.5
Current trade and other payables	94.1	-	-	94.1
	135.9	-	-	135.9

Details on leases and other commitments are provided in note 30.

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 revenue through adverse movements in interest rates. This relates to bank deposits held in the ordinary course of business. The Group has a cash management policy which requires management to monitor cash levels and returns within set parameters on a continuing basis.

Bank and similar deposits 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:

Effective interest rates applicable to bank deposits

	2014 %	2013 %
Deposits with banks and liquidity funds	0.70	0.85

Deposits with banks and liquidity funds are repriced at intervals of less than one year.

At 30 June 2014, 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 £1.5 million higher/lower (FY2012/13: £1.5 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 post-tax profits.

In addition, the Group is indirectly exposed to interest rate risk from units in funds which invest in debt securities and the Group holds seed capital investments in those funds.

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, whilst 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 geographic areas. The Group also holds a number of seed capital investments which are denominated mainly in US dollars, Brazilian real 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 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 1.0% exchange movement in the US dollar, Brazilian real and Indonesian rupiah, net of hedging activities.

	2014		2013
Foreign currency sensitivity test	Impact on profit before tax £m	Impact on equity £m	Impact on profit before tax £m	Impact on equity £m
US dollar +/- 1%	3.2	3.2	2.9	2.7
Brazilian real +/- 1%	-	0.1	0.1	0.2
Indonesian rupiah +/-1%	0.1	0.4	0.5	0.4

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 available-for-sale and non-current asset seed capital investments or indirectly either through line-by-line consolidation of underlying financial performance and positions held in certain funds or potential impairments when fair values less costs to sell of seed investments held-for-sale are less than carrying amounts. Details of seed capital investments held are given in note 21.

The Group has well defined procedures governing the appraisal, approval and monitoring of seed capital investments.

At 30 June 2014, a 5% movement in the fair value of these investments would have had a £9.4 million (FY2012/13: £7.7 million) impact on net assets and impact on profit before tax would have been £3.7 million (FY2012/13: £4.9 million).

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 in severe 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, throughout Ashmore's history, 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$75.0 billion and applying the year's average net management fee rate of 60bps, a 5% movement in AuM would have a US$22.5 million impact on management fee revenues (FY2012/13: using the year end AuM level of US$77.4 billion and applying the year's average net management fee rate of 68bps, a 5% movement in AuM would have a US$26.3 million impact 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 2014, protect a proportion of the Group's revenue cash flows from foreign exchange movements and occur consistently throughout the year. The cumulative fair value of the outstanding foreign exchange hedges asset at 30 June 2014 was £2.4 million (30 June 2013: £2.1 million foreign exchange hedges liability) and is included within the Group's derivative financial instrument assets.

The notional and fair values of foreign exchange hedging instruments were as follows:

	2014		2013
	Notional amount £m	Fair value assets/ (liabilities) £m	Notional amount £m	Fair value assets/ (liabilities) £m
Cash flow hedges
Foreign exchange nil-cost option collars	85.9	2.4	89.4	(1.3)
Foreign exchange forward contracts	-	-	3.3	(0.1)
	85.9	2.4	92.7	(1.4)

The maturity profile of the Group's outstanding hedges is shown below.

	Notional amount with maturity date (£m)
	2014			2013
	Collars	Forward contracts	Total	Collars	Forward contracts	Total
Within 6 months	39.8	-	39.8	38.1	3.3	41.4
6 - 12 months	33.3	-	33.3	41.4	-	41.4
>12 months	12.8	-	12.8	9.9	-	9.9
	85.9	-	85.9	89.4	3.3	92.7

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.

A £2.8 million intrinsic gain (FY2012/13: £0.4 million loss) on the Group's hedges has been recognised through other comprehensive income and £nil intrinsic value (FY2012/13: £nil) was reclassified from equity to the statement of comprehensive income in the year.

Included within the realised and unrealised hedging gain of £3.5 million (note 7) recognised at 30 June 2014 (£1.2 million loss at 30 June 2013) are:

-      a £1.7 million gain in respect of foreign exchange hedges covering net management fee income for the financial year ending 30 June 2015 (FY2012/13: £0.5 million loss in respect of foreign exchange hedges covering net management fee income for the financial year ended 30 June 2014); and

-      a £1.8 million gain in respect of crystallised foreign exchange contracts (FY2012/13: £0.7 million loss).

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. The table below lists financial assets subject to credit risk by credit rating:

		2014 £m	2013 £m
Cash and cash equivalents		249.1	271.7
Trade and other receivables		256.9	276.7
Total		506.0	548.4

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 2014 (30 June 2013: A to AAAm).

All trade and other receivables are considered to be fully recoverable and none were overdue at year end (30 June 2013: none).

Liquidity risk

The contractual undiscounted cash flows relating to the Company's financial liabilities all fall due within one year.

Details on leases and other commitments are provided in note 30.

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 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:

Effective interest rates applicable to bank deposits

	2014 %	2013 %
Deposits with banks and liquidity funds	0.59	0.34

Deposits with banks and liquidity funds are repriced at intervals of less than one year.

At 30 June 2014, 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 £0.9 million higher/lower (FY2012/13: £0.7 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 2014, if the foreign currency had strengthened/weakened by 1% against Sterling with all other variables held constant, profit before tax for the year would have decreased/increased by £3.6 million respectively (FY2012/13: decreased/increased by £3.5 million respectively).

23) Share capital

Authorised share capital

Group and Company	2014 Number of shares	2014 Nominal value £'000	2013 Number of shares	2013  Nominal value £'000
Ordinary shares of 0.01p each	900,000,000	90	900,000,000	90

Issued share capital - allotted and fully paid

Group and Company	2014 Number of shares	2014 Nominal value £'000	2013 Number of shares	2013 Nominal value £'000
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 2014 there were 503,750 (30 June 2013: 503,750) options in issue with contingent rights to the allotment of ordinary shares of 0.01p in the Company. There were also equity-settled share awards issued under the Omnibus Plan totalling 29,315,890 (30 June 2013: 28,339,002) shares that have release dates ranging from October 2014 to February 2019. Further details are provided in note 10.

24) Own shares

The Ashmore 2004 EBT was established to act as an agent to facilitate the acquisition and holding of shares in the Company with a view to facilitating the recruitment and motivation of the employees. As at the year end, the EBT owned 37,962,631 (30 June 2013: 35,205,106) ordinary shares of 0.01p with a nominal value of £3,796 (30 June 2013: £3,520) and shareholders' funds are reduced by £124.6 million (30 June 2013: £115.8 million) in this respect. It is the intention of the Directors to make these shares available to employees through the share-based compensation plans. The EBT is periodically funded by the Company for these purposes.

25) Treasury shares

Treasury shares held by the Company

	2014		2013
Group and Company	Number	£m	Number	£m
Ashmore Group plc ordinary shares	5,368,331	6.9	5,368,331	6.9

Reconciliation of treasury shares

	2014 Number	2013 Number
At the beginning and end of the year	5,368,331	5,368,331

The market value of treasury shares was £19.9 million at year end (30 June 2013: £18.4 million).

26) Trade and other payables

	Group 2014 £m	Group 2013 £m	Company 2014 £m	Company 2013 £m
Current
Trade and other payables	34.0	45.5	28.6	40.3
Accruals and deferred income	35.4	48.1	3.3	5.3
Amounts due to subsidiaries	-	-	0.9	0.2
Contingent consideration	-	0.5	-	-
Total trade and other payables	69.4	94.1	32.8	45.8

Contingent consideration

The Group's contingent consideration liabilities were written down to £nil during the year. The contingent consideration liabilities comprised amounts payable subject to achievement of agreed milestone targets by the relevant maturity date of 31 May 2014. The reduction of the discounted liability, the corresponding entry to which is reported within finance income, was driven principally by the levels of AuM managed by AEIM as at 30 May 2014, compared to higher levels forecast when the fair values of the contingent consideration liabilities were established.

Movement of contingent consideration

	Contingent consideration £m
At 30 June 2012	10.7
Net present value discount unwind	0.9
Fair value adjustment	(10.8)
Consideration that crystallised during the year	-
FX revaluation	(0.3)
At 30 June 2013	0.5
Fair value adjustment	(0.5)
At 30 June 2014	-

27) Subsidiaries

Operating subsidiaries

Movements in investments in subsidiaries during the year were as follows:

Company	2014 £m	2013 £m
Cost
At the beginning and end of the year	20.1	20.1

In the opinion of the Directors, the following subsidiary undertakings principally affected the Group's results or financial position. A full list of subsidiary undertakings at 30 June 2014 will be annexed to the next annual return of Ashmore Group plc filed with the Registrar of Companies.

Name	Country of incorporation/ formation and principal place of operation	% of equity shares held by the Group
Ashmore Investments (UK) Limited	England	100.00
Ashmore Investment Management Limited	England	100.00
Ashmore Management Company Limited	Guernsey	100.00
Ashmore Investment Management (Singapore) Pte. Ltd.	Singapore	100.00
AA Development Capital Investment Managers (Mauritius) LLC	Mauritius	55.00
Ashmore Investments (Brasil) Limited	Guernsey	88.57
Ashmore Investments (India) Limited	Mauritius	100.00
Ashmore Investments (Turkey) NV	Netherlands	84.20
Ashmore Investment Management (US) Corporation	USA	100.00
PT Ashmore Asset Management Indonesia	Indonesia	70.00
Ashmore Investments (Colombia) SL	Spain	100.00
Ashmore Japan Co. Limited	Japan	100.00
Ashmore Investment Consulting (Beijing) Co. Limited	China	100.00
Ashmore Equities Holding Corporation	USA	100.00
Ashmore Equities Investment Management (US) L.L.C.	USA	62.90

Consolidated funds

The following investment funds, over which the Group is deemed to have control, have been consolidated into the Group's results.

Name	Type of fund	Country of incorporation/ formation and principal place of operation	% of net assets value held by the Group
Ashmore Emerging Markets Equity Fund	Equity	USA	65.0%
Ashmore Brasil Ações FIC De FIA	Equity	Brazil	69.4%
Ashmore Dana Ekuitas Nusantara	Equity	Indonesia	81.0%
Ashmore Dana Obligasi Nusantara	Local currency	Indonesia	91.5%
Ashmore SICAV Equity Select Fund	Equity	Luxembourg	100.0%
Ashmore SICAV 3 Multi Strategy Fund	Multi-strategy	Luxembourg	83.1%

28) Investments in associates and joint ventures

Associates and joint ventures

The Group held interests in the following associates and joint ventures as at 30 June 2014:

Name	Type	Nature of business	Country of incorporation/ formation and principal place of operation	% of equity shares held by the Group
VTB-Ashmore Capital Holdings Limited	Associate	Investment management	Russia	50%
Everbright Ashmore	Associate	Investment management	China	30%
Central China Securities Co. Limited	Joint venture	Investment management	China	49%

The associates and the joint venture are unlisted.

Movements in investments in associates and joint venture during the year were as follows:

	2014			2013
	Associates £m	Joint ventures £m	Total £m	Associates £m	Joint ventures £m	Total £m
At the beginning of the year	2.3	9.5	11.8	2.3	-	2.3
Additions	-	-	-	-	9.9	9.9
Share of profit	0.2	(2.1)	(1.9)	0.3	(0.4)	(0.1)
Distributions	(0.2)	-	(0.2)	(0.3)	-	(0.3)
At the end of the year	2.3	7.4	9.7	2.3	9.5	11.8

Associates

The summarised aggregate financial information on associates is shown below.

Group	2014 £m	2013 £m
Total assets	3.4	4.7
Total liabilities	(1.1)	(1.4)
Net assets	2.3	3.4
Group's share of net assets	0.7	1.1
Revenue for the year to 30 June 2014	4.6	4.9
Profit for the year to 30 June 2014	0.6	1.1
Group's share of profit for the year	0.2	0.3

The carrying value of the investments in associates include attributable goodwill that arose on acquisition of the associates. Although the Group's share of net tangible assets of the associates is currently below the aggregate carrying value of the associates reflected on the consolidated balance sheet, the Group has considered that this position is temporary. No permanent impairment is believed to exist relating to the associates.

The Group has undrawn capital commitments of £5.1 million (30 June 2013: £6.4 million) to investment funds managed by the associates.

Further details are provided in note 30.

Joint ventures

During the prior year, the Group entered into an agreement to acquire a 49% interest in a fund management joint venture with Central China Securities Co. Ltd. in China. Under the terms of the agreement and upon being granted the required approvals by the China Securities Regulatory Commission and other relevant government authorities, the Group contributed its share of the initial capitalisation, equivalent to £9.9 million.

Summarised financial information on the Group's share in the joint venture is shown below:

	2014 £m	2013 £m
Current assets	8.7	5.7
Non-current assets	0.1	0.1
Current liabilities	(1.4)	(0.1)
Total equity	7.4	5.7
Income	0.6	0.4
Expenses	(2.7)	(0.8)
Loss for the year	(2.1)	(0.4)

29) 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 for employee services is shown below:

£m	2014 £m	2013 £m
Short-term employee benefits	0.9	2.7
Defined contribution pension costs	-	-
Share-based payment benefits	(0.4)	1.7
	0.5	4.4

Share-based payment benefits represent the fair value charge to the statement of comprehensive income of share awards.

During the year, there were no other transactions entered into with key management personnel (FY2012/13: none). Aggregate key management personnel interests in consolidated funds at 30 June 2014 were £3.3 million (30 June 2013: 3.5 million).

Transactions with subsidiaries - Company

Details of transactions between the Company and its subsidiaries are shown below:

	2014 £m	2013 £m
Transactions during the year
Management fees received	45.0	79.1
Net dividends received	143.2	196.7
Loans given to subsidiaries	40.9	51.3

Amounts receivable or payable to subsidiaries are disclosed in notes 18 and 26.

Transactions with Ashmore Funds - Group

During the year, the Group received £158.5 million of gross management fees and performance fees (FY2012/13: £337.0 million) from the 90 funds (FY2012/13: 75 funds) it manages and which are classified as related parties. As at 30 June 2014 the Group had receivables due from funds of £55.3 million (30 June 2013: £57.6 million).

Transactions with the EBT - Group and Company

The EBT, which acts as an agent for the purpose of the employee share-based compensation plans, has been provided a loan facility to allow it to acquire Ashmore shares in order to satisfy outstanding unvested shares awards. The EBT is included within the results of the Group and the Company. As at year end the loan outstanding was £137.6 million (30 June 2013: £112.7 million).

Transaction 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 operates with a view to giving back into the countries and communities in which the Group invests and which contribute to Ashmore's income and profitability. The Group donated less than £0.1 million to the Foundation during the year (FY2012/13: £0.1 million).

30) Commitments

Operating lease commitments

The Group and Company have entered into certain property leases. The leases have no escalation clauses or renewal or purchase options, and no restrictions imposed on them. The future aggregate minimum lease payments under these non-cancellable operating leases fall due as follows:

Group

	2014 £m	2013 £m
Within 1 year	2.8	2.9
Between 1 and 5 years	8.2	8.5
Later than 5 years	5.2	6.7
	16.2	18.1

Company

	2014 £m	2013 £m
Within 1 year	1.2	1.2
Between 1 and 5 years	4.6	4.6
Later than 5 years	5.2	6.3
	11.0	12.1

Operating lease expenses are disclosed in note 11.

Undrawn investment commitments

	2014 £m	2013 £m
Ashmore I - FCP Colombia Infrastructure Fund	2.9	4.9
Everbright Ashmore China Real Estate Fund	1.6	3.0
VTBC-Ashmore Real Estate Partners I, L.P.	3.5	3.4

Company

The Company has undrawn loan commitments to other Group entities totalling £84.2 million (30 June 2013: £94.5 million) to support their investment activities but has no investment commitments of its own (30 June 2013: none).

31) Post-balance sheet events

There were no post-balance sheet events that required adjustment of or disclosure in the financial statements for the year ended 30 June 2014.

32) Accounting estimates and judgements

Estimates and judgements used in preparing the financial statements are regularly evaluated and are based upon management's assessment of current and future events. The principal estimates and judgements that have a significant effect on the carrying amounts of assets and liabilities are discussed below.

Goodwill

The Group tests goodwill and intangible assets annually for impairment. The recoverable amount for goodwill is determined in reference to the Group's market capitalisation, whereas recoverable amount for intangible assets is determined based upon value in use calculations prepared on the basis of management's assumptions and estimates. The carrying value of goodwill and intangible assets on the Group's balance sheet at 30 June 2014 was £72.2 million (30 June 2013: £84.3 million). Management considers that reasonable possible changes in any of the key assumptions applied would not cause the carrying value of goodwill and intangible assets to materially exceed their recoverable values.

Performance fees

The Group assesses the recognition of performance fees to determine whether receipt of the fees is considered probable and the amount reliable. The assessment is made using management's judgement of the circumstances relevant to each performance fee entitlement.

There were no outstanding performance fees receivable at 30 June 2014 (30 June 2013: none).

33) 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 the 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 statement contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise.

34) Statutory accounts

The financial information set out above does not constitute the Group's statutory accounts for the years ended 30 June 2014 or 2013. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 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 2013 or 2014.

 

END

 

 

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