Schroders
2013 Results
6 March 2014
Michael Dobson Chief Executive
2013: Record results
Organic growth and strategic acquisitions
 Net revenue up 24% to £1,407.6m (2012: £1,134.9m)
 Profit before tax and exceptional items up 41% to £507.8m (2012: £360.0m)
 Full year dividend up 35% to 58.0 pence per share (2012: 43.0 pence per share)
 Net new business £7.9bn
 Acquisitions: Cazenove Capital, STW
 Assets under management up 24% to £262.9bn
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2013 Annual Results | March 2014
Asset Management
Strong levels of new business
2013 net flows – by channel £bn
 Gross inflows £70.3bn (2012: £53.6bn)
 Net inflows £9.4bn
6
4
2
 Stable revenue margins
 Diversified by channel, region
0
-2
Q1
 68% of funds outperforming over 3 years
Q2
Q3
Institutional
Q4
Intermediary
2013 net flows – by region £bn
6
4
2
0
-2
-4
Q1
UK
Q2
Europe
Q3
Asia-Pacific
Q4
Americas
Asset Management net flows only
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2013 Annual Results | March 2014
Institutional
Assets under management: £144.3bn (2012: £123.7bn)
2013 net inflows by asset class £bn
 Net inflows £4.6bn
3
 Multi-asset, equities, fixed income, alternatives
 Strong performance in Australia, UK
 70% of Institutional funds outperforming over 1 year
2
1
 Performance fees £35.1m
0
-1
-2
Q1 2013
Equities
3
Q2 2013
Multi-asset
Q3 2013
Fixed Income
2013 Annual Results | March 2014
Q4 2013
EMD/Property
Intermediary
Assets under management: £88.5bn (2012: £72.0bn)
2013 net inflows by asset class £bn
 Net inflows £4.8bn
 Net inflows in all regions, multi-asset and equities
 New product launches
5
4
3
 Cazenove Capital strengthens UK Intermediary: UK
equities, European equities, multi-manager, fixed income
2
 70% of Intermediary funds outperforming over 1 year
1
 Performance fees £45.1m
0
-1
-2
Q1 2013
Equities
4
Q2 2013
Multi-Asset
Q3 2013
Fixed Income
2013 Annual Results | March 2014
Q4 2013
EMD/Property
Equities
Assets under management: £119.6bn (2012: £96.3bn)
 Net inflows £2.8bn: Asian, emerging market, Japanese, global, European
 70% of funds outperforming over 3 years
 Diversified range of strategies: global, regional, quant, growth, value, income, small and mid cap
 Integration of Cazenove Capital investment teams
 Selective additions to talent pool
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2013 Annual Results | March 2014
Multi-asset investments and portfolio solutions
Assets under management: £52.3bn (2012: £42.8bn)
 £21.3bn of net new business since 2010
 £6.9bn in 2013
 Organised across investment outcomes: wealth preservation
risk controlled growth
income
inflation protection
risk mitigation
 Growth opportunities diversified across outcomes, regions, Institutional and Intermediary
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2013 Annual Results | March 2014
Fixed Income
Assets under management: £43.4bn (2012: £37.6bn)
 Strong performance: 78% of AUM outperforming over 1 year, 70% over 3 years
 Consultant upgrades and new business opportunities in: unconstrained
absolute return
long duration
global/European credit
 STW integration on track, investment performance above target
 Acquired 30% shareholding in insurance linked securities business - AUM increased from $250m to $1.1bn in 7 months
 Established capability in convertibles in December 2013: AUM £1.4bn
 Positioned for growth
Insurance linked securities AUM as at 28 February 2014
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2013 Annual Results | March 2014
Wealth Management
Assets under management: £30.1bn (2012: £16.3bn)
 Net revenues up 59% to £150.0m (2012: £94.4m)
 Profit before tax and exceptional items up 191% to £34.3m (2012: £11.8m)
 Exceptional items: Cazenove Capital amortisation and integration costs, US DoJ programme provision
 Net outflows £1.5bn
 AUM up 85% to £30.1bn (2012: £16.3bn)
 Significantly increased scale in the UK
 Broader client offering
 New leadership
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2013 Annual Results | March 2014
Schroders
2013 Annual Results
6 March 2014
Richard Keers Chief Financial Officer
Financial highlights – record results deliver 35% increase in dividend
Net revenue, including performance fees (£m)
1600
1400
1200
1000
800
600
400
200
0
Profit before tax and exceptional items (£m)
1,408
1,156
73
1,153
38
1,135
29
200
1,083
1,115
2011
1,106
2012
1,327
2013
150
130
110
90
10
60.3
400
Diluted earnings per share before exceptional items (pence)
50
507.8
500
300
2010
70
81
Exceptional items (£m)
600
108.3
111.9
101.3
144.6
2010
2011
2012
2013
100
0
406.9
407.3
360.0
447.5
2010
2011
2012
2013
Dividend per share (pence)
70
60
50
40
30
20
10
0
37
39
43
58
2010
2011
2012
2013
2013 Annual Results | March 2014
Net revenue – driven by investment returns, organic growth and
acquisitions
Increase of £273m
£m
Net revenue
1,135
Net new business
56
Investment Returns
96
Cazenove Capital and STW
80
Performance fees
52
Other revenue
4
Group revenue
(15)
Wealth Management
150
Asset Management
1,251
Asset Management
1,251
Net revenue
1,408
Wealth Management
94
Asset
Management
1,015
Group Segment 26
Group Segment
11
2012
2013
Cazenove and STW revenue contribution excludes performance fees.
11
Asset
Management
1,247
2013 Annual Results | March 2014
Asset Management net revenues (1) – good core business growth
in Institutional
£m
800
700
600
500
557
35
489
24
454
27
400
300
200
522
465
427
100
0
2011
2012
Institutional
12
2013
Performance fees
2013 Annual Results | March 2014
Asset Management net revenues (2) – significant rise in Intermediary
Net revenue margins, excluding performance fees, at 53 bps
£m
800
690
700
45
588
600
500
557
10
526
489
454
4
35
24
27
400
300
200
645
578
522
465
427
522
100
0
2011
2012
Institutional
13
Intermediary
2013
Performance fees
2013 Annual Results | March 2014
Wealth Management net revenues – up 59% supported by Cazenove
acquisition
Net revenue margins 64 bps (2012: 63 bps*)
£m
0
170
150.0
150
13.6
130
110
90
114.3
94.4
14.4
13.8
24.9
19.8
70
109.7
50
30
26.7
75.0
68.7
10
(7.9)
-10
2011
Management fees
2012
Transaction fees
Net banking interest income
2013
Loan loss provisions
* Excluding loan losses in 2012 of £7.9 million
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2013 Annual Results | March 2014
Profit before tax and exceptional items – a good picture with record
profits
Increase of £148m
£m
Profit before tax
and exceptional items
508
Compensation costs
(107)
Profit before tax
360
Wealth Management
12
Other costs
(22)
Net finance income/JVs
and associates
4
Net revenue
273
Asset
Management
469
Asset
Management
348
Group Segment
0
Group Segment
5
2012
15
2013
2013 Annual Results | March 2014
Wealth
Management
34
Operating expenses – ratios in line with long-term target
Before exceptional items
2013
£m
2012
Asset
Management &
Group
Compensation costs
545.7
583.4
69.1
652.5
+20%
Other costs
233.5
208.8
45.9
254.7
+9%
Depreciation
12.0
11.8
0.7
12.5
+4%
Total
791.2
804.0
115.7
919.7
+16%
Headcount
3,011
2,933
595
3,528
+17%
%
2012
2013
Compensation cost:operating revenue ratio
49%
46%
Cost:net revenue ratio
70%
65%
16
Wealth
Management
Total
2013 versus 2012
2013 Annual Results | March 2014
Exceptional items
2013
£m
Asset Management
Wealth
Management
Group
Total
Acquisition costs
-
-
4.2
4.2
Integration costs
4.0
7.2
-
11.2
Amortisation of acquired intangible assets – Cazenove and
STW
6.3
5.2
-
11.5
Amortisation of acquired intangible assets – other
3.2
0.8
-
4.0
Deferred compensation arising from acquisitions
-
-
11.7
11.7
13.5
13.2
15.9
42.6
-
17.7
-
17.7
13.5
30.9
15.9
60.3
Sub-total
US Department of Justice provision and related costs
Total
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2013 Annual Results | March 2014
Group segment before exceptional items – investment capital returns
targeted to cover costs
Segment disclosure (£m)
2012
2013
Net revenue
25.7
10.4
Operating expenses
(37.2)
(19.1)
Net finance income
11.7
12.1
Share of JVs and associates
(0.5)
1.5
Group segment (loss)/profit before exceptional items
(0.3)
4.9
Other comprehensive loss
(9.0)
(1.1)
(9.3)
3.8
18
2013 Annual Results | March 2014
Tax charge – unchanged and in line with guidance
2013
Change
2013 v 2012
before
exceptional items
2012
Before
exceptional items
Exceptional items
Total
Profit before tax – £m
360.0
507.8
(60.3)
447.5
+147.8 +41%
Tax – £m
(76.8)
(103.0)
8.2
(94.8)
+26.2 +34%
Profit after tax – £m
283.2
404.8
(52.1)
352.7
+121.6 +43%
Effective tax rate
21.3%
20.3%
13.6%
21.2%
Basic earnings per share
104.7p
149.9p
(19.3)p
130.6p
19
2013 Annual Results | March 2014
+45.2p
+43%
Movement in Group capital
Increase of £199m as at 31 December 2013
£m
Share purchases
(142)
Profit after tax and
exceptional items
353
Dividends
(124)
Exchange
differences
(19)
Other
131
Group capital
2013
£2,269m
Group capital
2012
£2,070m
1 January 2013
20
31 December 2013
2013 Annual Results | March 2014
Group capital allocation – continued strong financial position
Increase of £199m as at 31 December 2013
£m
Asset Management
and Wealth Management
operational capital
December
2012
June
2013
December
2013
957
879
1,071
Investment capital breakdown (%)
Government guaranteed bonds
5% 2%
Seed capital
15%
Investment capital*
Other
(intangibles etc.)
Statutory Group capital
926
187
1,077
229
30%
677
521
Cash deposits, CDs and
commercial paper
Multi-asset
21%
27%
2,070
2,185
2,269
Legacy private equity
Alternatives
*Not included in AUM
21
2013 Annual Results | March 2014
Strong financial position
 Record profitability in 2013
 Good cost control
 Strong cash generation
 Significant increase in returns to shareholders
22
Schroders
2013 Results
6 March 2014
Michael Dobson Chief Executive
Outlook and future priorities
Focus on organic growth
 Positive start to 2014
 Complete integration of Cazenove Capital and STW
 Repositioned capability and contribution from Wealth Management
 Growth opportunities in most asset classes and regions
 Operational efficiencies
 Long-term focus
24
2013 Annual Results | March 2014
Forward-Looking Statements
These presentation slides may contain forward-looking statements with respect to the financial condition, results of
operations, strategy and businesses of the Schroders Group. Such statements and forecasts involve risk and uncertainty
because they are based on current expectations and assumptions but they relate to events and depend upon
circumstances in the future and you should not place undue reliance on them. Without limitation, any statement preceded
by or followed by or that include the words ‘targets’, ‘plans’, ‘believes’, ‘expects’, ‘aims’ or ‘anticipates’ or the negative of
these terms and other similar terms are intended to identify such forward-looking statements. There are a number of
factors that could cause actual results or developments to differ materially from those expressed or implied by those
forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors’ current
view and information known to them at the date of this presentation. The Directors do not make any undertaking to update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Nothing in
this presentation should be construed as a profit forecast.
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2013 Annual Results | March 2014
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