Ashmore Group Plc (ASHM) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the Ashmore Group PLC results for the 6 months to the end of December 2020. My name is Mark Coombs. I'm the Chief Executive of the company. And also on the call with me, I have Tom Shippey, Group Finance Director; Paul Measday, Head of Investor Relations. We're going to take you into the numbers now. So first of all, starting on Slide 2 in front of you, I hope, because it's in front of me, which is always good, is the overview of how we've been doing. Our financial performance for the 6 months reflects the typical early stages of a recovery cycle, really. Our AuM were up 11% over the 6 months to USD93 billion, principally driven by good investment performance. We had lower average assets under management year-on-year from the previous period, down 6%, reflecting really where we are in the recovery cycle. Our adjusted EBITDA was down 12% year-on-year, in line with revenue. Margin was maintained at 68%. But despite the adjusted EBITDA being down, our strong seed capital returns in terms of our investments delivered growth in profit before tax of 14% to GBP 150.6 million. So PBT up 14%. So decent financial performance for this stage, the early stage of a recovery cycle. In terms of other things that stand out for me, significant outperformance delivered in the period, 1, 3 and 5-year performance, dramatic improvement as a result. And the cycle is as usual. We think there's much more alpha to come. This is a typical recovery cycle from the crisis last March. Our strategy continues to do what we want it to do. Equities AuM has grown 41% in the period to now over USD 6.5 billion, driven by strong performance and flow. Our investment-grade fixed income universe continues to grow with strong institutional demand and mutual fund products launched to pick up people interested in dollar-based yields, in particular. Our ESG funds, the dedicated ones that we've established and seeded are developing nice performance track records going well. And our local asset management platforms, all part of the strategic diversification that we've always been looking for are growing rapidly, a 39% increase in assets under management over the 6-month period. So basically, the outlook, we think, continues to favor EM. The critical thing, of course, is vaccination programs that work. And so they're critical to worldwide recovery in 2021. As that rolls out, we think the world does better steadily. Developed markets have had massive stimulus. And as that short-term support wears off, we think capital will do what it usually does in that situation, look for higher growth and returns elsewhere. And economic growth forecast and relative valuations continue to favor emerging markets over developed markets. So that's the overview. In terms of the detail of the strategy, let's just pick up on the key points. Our operating model is still doing well. We're delivering alpha as we should do at this time in the cycle. Our business model continues to be robust and flexible in terms of managing our cost base. This adapted well. And then the 3 key points that we've seen very nice progress in the half. Equities momentum, as I mentioned before, up 41%. All Cap, which is our second global emerging market equity strategy has now achieved a 3-year track record. And if you look to the right on this screen, under the first box global emerging market equity strategies, you can see 3-year numbers where we now have them also for Active -- for All Cap as well as for Active. And so our 2 global emerging market equity strategies are now beating their benchmarks, Active over 3 years by 240 basis points as it now has a much longer track record, All Cap by 700 basis points. Meanwhile, Small Cap continues to do well as part of the All Cap team at 760 basis points. So very strong equity outperformance over a 3-year period. Meanwhile in investment-grade fixed income, 3-year numbers, again, strong. These bonds that are investment-grade in emerging economies now make up more than 50% of all dollar external and corporate debt indices. So investment grade is the bulk of the issuance within the space. We have good performance, and institutional demand is steadily increasing, less volatile, strong macros, particularly against developed markets. High yields and, of course, no different in the investment grade. So in the sovereign space, we have 70 basis points of that for over 3 years and in the corporate space, we have 160. So strong investment grade performance in fixed income is attracting capital. And then finally, ESG, which, as you know, we've always cared about because, frankly, when you're investing in emerging economies, governments was the first thing we worried about way back 20-odd years ago. And now we have dedicated ESG funds, both the fixed income one and blended debt and an equity one. And as you can see, we -- what we do there is we generate significant alpha, too. So in the blended debt space, we have 120 basis points of alpha over the benchmark since inception, which is about 2 years for the dedicated funds. And then in equities, we have a huge amount of alpha since March inception. It just happened to be that we launched it at the bottom of the market, which always helps. But still 26 times -- a lot. 26% of alpha is a seriously good number. So good, I can hardly get my head around it, but I just managed it. So we have a broad range of product. We have people beginning to look at it. We also, in terms of sustainability, we integrate the way we think about it, not only underpinning all that we do, these dedicated funds producing good numbers. And our foundation, our charitable foundation, which gives back to emerging economies, is -- continues to grant to projects, which help offset our emissions and get us where we want to be in terms of ESG as a company. And then finally, as part of this whole diversification of assets under management revenue story, local markets are growing significantly. So our scalable platforms now are doing nicely, nearly 20% in 2020 in terms of growth in assets despite the March shock and over 39% in the last 6 months. Next slide, please, Paul. Investment performance, just as somewhere that fits, because I think that's good -- if you like, a leader in terms of what happens in terms of client activity. Over the 1 year, the group is now 50% outperforming. After the shock in March, we were down to 9% outperforming over 1 year. But now 50% of liquid securities are now outperforming. As you can see, strong in local and corporate across the piece, weaker in external and blended, and equity is a mixture of strong local story and not so strong in global, driven particularly by one of the larger things, which was just underperforming its benchmark, which actually isn't now. Reflecting into 3 years, which is obviously critical, we're up from 17% outperforming over the period to 39%. As you can see, very strong global equity outperformance, which is what I'm sure you picked up on the previous slide and is what people particularly focus on. So despite the hit in fixed income in March '20 and in equity to an extent, global equity has been performing very strong. Over 85% of our accounts are now outperforming over 3 years. And in the fixed income space, we're now up over 60% in local, over 50% in corporate. And it's continued to move in the right direction. And what does that do over the 5 years? At June '20, we were 74% outperforming. And now we're up to 91%. So performance is doing what we would expect it to do at this point in the cycle, and we're happy with performance. And this is something that we feel very comfortable that clients can be discussed with happily and that we can sell. So over the last 6 months, that number actually raises to 97%. But it should be at this time in the cycle. This is exactly what we would expect. So things are happening as we would hope. Next slide, please, Paul. One thing that people often ask us about in the fixed income space is our blended debt strategy, which mixes external, local and corporate risk, and how that performs. And so what we've done is we show people how our performance works over the cycles. And what we've done on the right is produce a graph, which gives you, if you like, 3 events. One is the global financial crisis of 2008, '09, which is the gray line. The second is the U.S. rate hike panic 2014 to '16. And the third is COVID, which is the dark blue line that runs out just over halfway across the page. And what this really reflects is how our blended debt strategy performs, after market drawdown significant crisis. It lags straight away. We then get very active, not that we're not always active, but we get a big opportunity in a crisis to be very active. What happens is the markets go through an initial recovery phase, where, first of all, our beta was oversold dramatically as people repriced. Economic conditions then tend to improve and asset prices recover. And if you look at where we are now, first phase in terms of recovery has been there. The second phase is now cutting in. And of course, the shape of that recovery will depend on COVID-19, the way things are going. But if you just look on the right graph again and the table below it, if you look, our drawdown in COVID-19 was nearly 9%. It was 7 and a bit percent and 4% in the global financial crisis and the rate hikes as well. Nine months out, we've achieved 12.5% worth of alpha against 11.8% in the global financial crisis and 10.3% in U.S. rate hikes. Three months later, those numbers have gone up to 15% and 13% and 2 years later, 24% and 17%. We don't have enough past performances, not necessarily a guide to future performance. But time and time, again, it has been with us. So we would see this trend continuing for a good 12 to 15 months in terms of further outperformance. And as you can see on the graph, that looks relatively reasonable, and that's how we achieve it, but we think there's every reason we should. There's nothing to suggest that we won't get the same story as we've had before. Next slide, please, Paul.

Thanks, Mark. So the high-level summary of Ashmore's financial performance over the 6 months and consistent with the early stage of the market recovery is that strong investment performance across the group's themes have delivered AuM growth, meaningful gains on seed capital investments and therefore, a sharp rise in pretax profit year-on-year. However, the natural cyclical lag in terms of average asset levels and therefore, revenues, means that adjusted EBITDA is lower than in the prior year period. Moving into the detail. Assets under management increased by 11% to $93 billion over the 6 months, driven by strong investment performance. However, the initial negative impact of COVID-19 on market levels in early 2020 means that average AuM was 6% lower than in the 6 months to December '19, and the knock-on effect on net management fee income means adjusted net revenues declined 12% year-on-year. Ashmore's flexible operating model coupled with a relentless focus on controlling costs means that adjusted operating costs were reduced by 9% compared with the prior year, delivering adjusted EBITDA of GBP 107.2 million, and meaning that the group maintained its high operating margin at 68%. The combination of higher market levels and the significant outperformance that Mark described resulted in very strong gains on seed capital, totaling GBP 49.3 million for the period. And consequently, profit before tax increased 14% to GBP 150.6 million. And diluted EPS was 15% higher at 18.2p per share, with the group benefiting from a lower effective tax rate of 14.7%. Therefore, balancing operational performance with the statutory results at the interim stage, the Board has maintained the dividend at the prior year level of 4.8p per share. As Mark showed, investment performance was strong across all investment themes in the period and added nearly $11 billion to assets under management. Gross subscriptions of $7.5 billion or 9% of AuM were lower than in the prior year period but reflected consistent trends. Importantly, the group's distribution model has adapted to the remote working environment that continues in many regions globally and through existing strong relationships, together with the ability to develop new ones, has delivered a diversified mix of new mandate wins and meaningful additions to existing mandates. Of note, has been the growing demand for investment-grade product, particularly in external debt, and continued subscriptions into global equities products, meaning that equities have now delivered consecutive net inflow quarters since mid-2019. Redemptions of $8.9 billion were comparable to the prior year period, and reflect a range of independent decisions with no overriding pattern. Asset allocation-based decisions added to redemptions from blended debt and local currency, and there were mutual fund outflows in the local currency and corporate debt themes. Approximately 40% of the growth redemptions were from the intermediary channel. And while this was a similar level of churn to the prior year period, it's understandably higher than the approximate 10% share of AuM that these clients represent. On a net basis, outflows of GBP 1.4 billion improved from the GBP 5.8 billion outflow in the preceding 6 months that comprised $2 billion redeemed by intermediary clients, offset by GBP 0.8 billion of net institutional inflows while $200 million was returned to investors from the alternatives theme following successful asset realizations. In summary, asset development over the past 6 months is consistent with Ashmore's experience of previous recovery cycles following a period of market stress with outperformance initially driving asset growth and the net flow picture improving, albeit with a lag. Now before I get into the detail of the financial results, I thought it would be useful to highlight the increasing contribution of Ashmore's local investment management platforms. As a reminder, these businesses have been established to exploit the significant domestic EM growth opportunity as GDP per capita increases and independent asset management industries develop and become more sophisticated. In addition to asset and profit growth, they also diversified the group's investment management capabilities, recurring management fee income and client base. Together, these businesses grew assets by nearly 40% over the 6-month period and today, manage approximately $7 billion. Individually, the businesses in Colombia, India, Indonesia and Saudi Arabia, each managed in excess of $1 billion, and it's particularly pleasing that following its IPO a year ago, Ashmore Indonesia has continued to grow strongly, increasing its assets by 20% to almost $3 billion. It's also encouraging that in addition to raising capital from local investors, a number of these platforms have attracted mandates from the group's global institutional client base, where the client is seeking specific country or regional exposure. Ashmore will continue to develop and support these businesses as they become a more meaningful part of the group's activities, and we'll seek further opportunities to expand the network where possible. While adjusted net revenues for the period were 12% lower year-on-year, the main components of management fees, performance fees and FX-related items developed differently, reflecting the specific point in the recovery cycle. It's, therefore, maybe worthwhile spending some time going through the detail here. Net management fee income declined by 17%, with approximately half of the movement, the result of the 6% lower average AuM level and the headwind of stronger sterling against the U.S. dollar compared with the prior year period. The change in the group's average net management fee margin from 46 to 42 basis points accounts for the rest of the move and is primarily due to the impact of changes in client type and product mix. Looking at the 4 basis point move, net outflows from higher-margin mutual funds in the local currency and corporate debt fee account for 1.5 basis points. Investment fee mix effects, notably the growth in overlay AuM, albeit partially offset by continued growth in the equities theme, explains another basis point. And a further basis point is the consequence of decent growth in large institutional mandates, both winning new clients and additional applications to existing funds. This leaves around 0.5 basis point that is not directly attributable to these factors and represents the impact of sub-theme mix, for example, the growth in investment-grade product within the external debt theme as well as competitive margin pressure in keeping with our long-run expectations. My guidance therefore continues to be for these competitive effects to reduce the revenue margin by approximately 1 basis point or so every 12 to 24 months, but with the usual caveat that other factors may impact the reported margin as we've seen again in this period. Turning now to performance fee income. The group delivered GBP 7.7 million, more than twice the level of the prior year and higher than estimated at the full year results in September. Additional fees were earned by funds with measurement dates between October and December, with performance fee generation benefiting from the ongoing market rally, Ashmore's significant alpha generation as well as the realizations in alternatives. In terms of full year guidance, given there are fewer funds with performance remeasurement dates in the second half, it's reasonable to assume that the historic rule of thumb holds, meaning approximately 2/3 of annual performance fee income is delivered in the first half. Therefore, full year performance fee income is likely to be no higher than GBP 11 million. Finally, the group generated GBP 8.7 million of foreign exchange gains in the period through the implementation of an effective hedging policy on the timing of foreign currency cash flows during the period. This more than offset the GBP 6.1 million of balance sheet FX translation losses, which were broadly in line with the sensitivity given in September, which we removed from the presentation of adjusted revenues. Turning now to operating costs. This shows a familiar picture of continued disciplined cost control and which means that adjusted operating costs were reduced by 9% year-on-year. Dealing first with staff costs, the broadly stable headcount and relatively low salary cap for group employees means that fixed staff costs GBP 13.6 million was unchanged compared with the prior year period. The variable bonus expense has been accrued as usual at 20% of pretax profit at the half-year stage and therefore, given lower reported revenues, this charge fell by 16% year-on-year. Other operating costs of GBP 9.6 million were reduced by 13% or GBP 1.4 million, primarily as a result of continuing restrictions relating to travel and office use in most of the group's locations, but also reflecting the ongoing strict control of all elements of the group's operating cost base. While the path of COVID-19 and the related restrictions remains uncertain, we continue to believe that Ashmore's business model and culture lend themselves to employees working collaboratively in close knit teams in an office environment. I therefore, consider some of these cost reductions to be temporary in nature. And when governments guidance permits, Ashmore will return to its offices globally and recommence business travel. For the immediate future, this still seems unlikely, and therefore, the first half run rate for non-VC costs is representative of the likely level for the second half. Another consistent feature of Ashmore's business model is its active seed capital program, which has delivered tangible benefits in terms of AuM, with 10% of the group's assets being developed from seeded products. In this reporting period, the group's investments also delivered a meaningful profit contribution with a total pretax gain of GBP 49.3 million, of which GBP 3.3 million was realized. The investment gain reflects the balance of investments by theme with just over half delivered by the equity funds and nearly 30% by funds in the alternatives theme. The balance was broadly spread across fixed income and multi-asset products. New seed investments made in the half totaled GBP 68 million, and included investment-grade products in the corporate debt theme, reflecting the growing demand for this asset class and in support of distribution initiatives, including seeding funds for a new third-party distribution channel in Latin America and providing incremental scale to existing equity products. Successful realizations of nearly GBP 80 million was achieved mainly in the equities theme as funds reach scale and attract client flow, thereby enabling the group to redeem its investment profitably and as a result of alternative funds realizing assets and subsequently returning capital to investors. Despite the net recycling of investments to cash over the 6 months, strong performance means the value of seed capital book increased and including undrawn commitments, is now approximately GBP 265 million. New investment strategies or distribution channels continue to be identified in support of the group's growth. And therefore, I'd expect the overall size of the program to remain in the broad range of GBP 250 million to GBP 300 million, subject to market movements and recycling opportunities. To complete the P&L picture, statutory profit before tax increased by 14% to GBP 150.6 million, driven by strong seed capital gains. The effective tax rate of 14.7% was lower than the 16.5% implied by the geographic mix of the group's profits. The benefit in the period derives from certain of the seed capital profits being nontaxable until realized and the impact of the increase of the group share price on the allowable value of equity awards made to employees. The composition of the group's profitability has not changed materially, and so I continue to expect the ongoing underlying tax rate to be in the range 16% to 17%. On a statutory basis, diluted EPS increased by 15% to 18.2p. However, after adjusting for FX translation in seed capital items, diluted EPS reduced by 13% to 12.8p per share. The Board has declared an undeclared interim dividend of 4.8p per share, balancing the strong mark-to-market profit contribution from seed investments with the operational performance given the stage of the recovery cycle. Looking now at the cash flow. The group continues to generate significant operating cash of GBP 89.2 million in the period. With active recycling of seed investments generating an additional GBP 35.9 million in cash over the 6 months. Ashmore's cash uses remained consistent being paying tax, distributing ordinary dividends to shareholders with purchasing shares into the group's employee benefit trust. Ashmore's cash balance typically reduces in the first half, given the payment of cash variable compensation to employees and the distribution of the final dividend in respect of the prior financial year. Additionally, the strength of sterling over the 6 months had a mark-to-market translation impact on the value of cash held in foreign currencies, both here in the U.K. and in the overseas operations, which, therefore, meant that, in aggregate, the group's reported cash balance reduced by approximately GBP 50 million over the period to GBP 441 million in total. And finally, from me, on the balance sheet, a brief update. The group's balance sheet remains reassuringly well capitalized and liquid, and our philosophy is to maintain a strong balance sheet throughout the cycle. Looking back over the past year, last year the strength and integrity of the balance sheet has once again served Ashmore and its clients and shareholders well, for example, by facilitating continued investment in growth opportunities through the seed capital program. As this page shows, the group's capital position continues to be robust, with no debt and significant resources in excess of the Pillar 2 regulatory requirement, equivalent to approximately 81p per share. The balance sheet is also highly liquid, with GBP 441 million of cash and approximately 75% or GBP 194 million of the seed capital investments in funds with at least monthly dealing frequency. So with that, I'll hand you back to Mark to say a few words on outlook.

Thanks, Tom. Thank you very much. So outlook is reasonable from here. I mean, obviously, the key driver of everything is, at this stage, is COVID vaccinations, it seems to me. Worldwide progress socially and economically is gaining -- and progress is going to require widespread vaccination. And happily, that's in train and how long it takes, how effective it is, and the rollout of that is going to be the key to '21. Having said that, I then look at where we go in that and where the best place to be is. And I feel if anything, emerging markets is more favored than ever over the developed markets. If you look at the graph on the right, you're looking at EM growth rates in light blue and in gray DM growth rates. '20, obviously had a pretty big hit for everybody, smaller hit for EM. And going forward from here, we would see stronger growth coming out of it for EM than for DM. Massive stimulus is fine, and we've seen that in particularly with developed world governments and central banks. The U.S. election result that some enjoyed some didn't, pretty supportive for markets in the near term, but the medium-term impact on growth from that kind of stimulus. Potentially sort of the currency devaluation in the U.S. dollar. And that, again, favors EM coming from here. As you know, we've talked about this many times, but they have lower debt to GDP. They also have higher real interest rates. And have been able in this cycle to do some monetary and physical stimulus, which is manageable compared to what happens in developed markets and where the numbers are really pretty high. Growth premium is there. Fixed income and equity markets are attractive valuations, particularly relative to developed markets. So both of our major liquid themes, we think, have an advantage over developed market themes of fixed income and equity. And we think it's supportive of capital flows. So as investors look for higher returns, even the simple things as yields in dollars is in the fixed income space, but also higher equity terms, given better growth rates and selling from lower bases. We're very well positioned to benefit from this. We're pleased with the shape of the business. It can always do better. We always love to do better, but we feel we're in a pretty good place at this stage in the cycle. So to sort of summarize, I've kind of covered this a little bit, but I guess that's the point of the summary, I should repeat myself once again. But hopefully, in a way that really gives you the number of what we think, we are financially as a company, where we should be at this stage of a recovery in markets, a very strong return from what we've done in terms of seed, as you would expect, having taken a hit before. But a much bigger return from the upside because it's what we do well in terms of investing. Our investment outperformance over this period has been very strong as it should be. As a strategy, the things that we're trying to do to diversify our business are paying off and paying off at a decent rate, both in terms of equities, local markets, pulling out the ESG book. And we believe investors will look for higher growth and returns and will favor EM over DM. So we think we're in a place where we're in pretty good shape, and we're looking forward to a good year. At this point, I think I'm going to throw it open for questions. We look forward to hearing them or seeing them depending on where they are.

First of all, we have some questions from Haley Tam. The 9-month performance to December is very clear and strong, but how has performance developed since the end of December?

Shall I take that one? I think January was a pretty weak month for markets generally. February has been pretty good. But obviously, you look at market numbers and there's some readthrough to what we do, but we're pretty comfortable with what we're doing in terms of alpha.

And then is Ashmore seeing higher volumes of clients interested in investing in EM debt in 2021 versus the second half of 2020. And related to that, what does Ashmore believe is its differentiated edge to win fund flows? Is it performance, longevity of activities, fees or something else?

This was a debt specific question. What normally happens after a crisis is you get knee jerk activity, especially by retail, principally in terms of nervousness and fear. You then get people -- and you get some positive institutional activity for those who understand process and get more comfortable with acquiring risk in a difficult period. But it tends to be lower activity after that for a little period as people absorb where they're at, decide what they want to do in asset allocate. Activity tends to pick up 12 to 18 months after a crisis but not in a straight-line like that, but in a steadily increasing line in terms of net flow. And if you look at the way we've been reporting what's happened, it's very -- this is extremely typical. This is exactly like all the other major crises we've had in terms of flow patterns. How will we do as flows recover, both in deb and equity, I think we'll do relatively well based on clients always like performance. They also like relationship and consistency of performance, understanding what that does. So I think there are certain products that produce certain risk return profiles that we are consistent in that. And I think people will be attracted to that. So performance and consistency of it over a long period of time is valuable. And I think that's, if you like, what we are offering people. We stick to our investment theme, both in fixed income and in equity. And we're doing what we said we do on the [ 10 ]. There's higher-risk products and lower-risk products. They're all in a very strong performance shape for the minute, which is good.

What ambitions does Ashmore have for equities as a proportion of AuM and local capital as a proportion of AuM? And what benefit to group EBITDA margin would a doubling of those assets under management in each area give?

Let me take the first part of that. And these are -- obviously, these are going to be slightly general answers. I mean, the reason we have decided a while ago, long ago, that we wanted to be not just in the fixed income space, but in the equity space and the alternative space in the [ end ] is we believe there are certain things that are underlying emerging market knowledge and analysis that we offer as a company to each other, and therefore, looking after the clients. We don't -- we didn't sit down 1 day and say, you know what, we should be 50% fixed income, 50% equity and 0 alternatives or 1/3, 1/3, 1/3. What we believe is as long as we can perform, and we're good in the space, and I think we demonstrably are proving that now in all of the things that we do. And we try to do it all the time, but we've had particularly strong recent performance in some of the new things that we do. We think assets will come as they should. I mean, it's not just about asset accretion. Obviously, the most important thing is that we perform and assets come when we continue to perform. So we think that we can continue to grow at a sensible speed. Equity selling from a lower percentage, you would expect to become a larger percentage over time. And that would be great. We'd like to have a balanced book of business. Would we want to be 100% fixed income? No. That's why we started in equities. Would we want to be 100% equity? No. That's why we have that fixed income book. So I would see certainly equities rising as a percentage naturally, although, of course, that can be slowed down from time to time for good reasons, when you get significant flow from your existing client base. We want to stay good at fixed income and continue to be good at equity, and we think business will flow to us. In terms of margin, do you have you got any rough numbers you want to throw out?

Broadly as a group that the local platforms are delivering around about 50% operating margin across the network. So there's a bit of a drag to the group's overall margin. As a consequence, it's probably no more than a percentage point or 2 but the good news is that, that 50% is expanding as each of the local platforms continues to grow and deliver scale. So I don't know whether it would be within a doubling of assets. But I would have thought by the time that the local platforms in aggregate got to 3x the size, so it's GBP 20 billion or so in total, that aggregate margin of 50% should be approaching the group's margin of high 60s or so. So therefore, closing the gap and boosting the overall group margin.

Yes, they tend to be wider margins than what we're doing in basic fixed income, as does equities, all of which is margin enhanced, which we're looking for, of course.

Okay. Given the strong recent fund performance, where does Ashmore expect the variable remuneration percentage to settle for the full year?

Well, as you know, every year, we sort of -- we put a straw man in place of 20% as a reasonable number at this time. We'll see how the performance is. I mean, obviously, better performance tends to increase the percentage. Worse performance tends to reduce it. We'll see how things -- we'll see how things roll. Too early to say.

And then from Gurjit Kambo at JPMorgan, what is the exit run rate on net management fee margins coming into the current calendar year? Tom?

It's not wildly different actually to the 42 basis points. It's a touch lower because some of the mix effects and the large mandates funded towards the back end of the first half. So there's a bit of sort of full period effect, mix and size to come through. But the current run rate margin is only about 0.5 basis point or so off from the average for the half.

And if there are any client mandates at risk in the current quarter, given performance pictures, what might that suggest in terms of net inflows or outflows in the current quarter?

Well, I think stepping back, the way we look at flow is exactly the same in this cycle as in any other. The good news is you see a lot of historical data in terms of how our flow profile has been. As I mentioned earlier, what tends to happen is you get a bit of a knee jerk reaction, then a bit of inactivity, then you get a bit more reaction and then you turn to net inflow. That typically happens over 12 months after a crisis, to be honest. I think we're exactly where we'd expect to be. So where are we now? We're kind of nearing 12 months. So we're getting the pattern we would expect. It really depends. Obviously, we would particularly like to see where we are come the full year. That will tell us exactly where we're at and whether this cycle is indeed, like all the others. So far, it's exactly like the others with some nuances here and there. But it's the flow pattern we would expect.

And from Mike Werner at UBS. What is the quantum of temporary cost savings that you've achieved through not traveling, for example, in the first half of this financial year? And secondly, given the gains in your alternatives market on the seed cover book, are there any new alternative funds in the pipeline?

Do you want to take the first one of those, Tom? I think you've covered it. Just re-brand some.