Schroders
2014 Results
5 March 2015
Michael Dobson Chief Executive
2014: record results
Continued progress in line with strategic goals
 Net revenue up 9% to £1,531.2m (2013: £1,407.6m)
 Profit before tax and exceptional items up 11% to £565.2m (2013: £507.8m)
 Earnings per share up 17% to 152.7 pence (2013: 130.6 pence)
 Full year dividend up 34% to 78 pence per share (2013: 58.0 pence per share)
 78% of assets under management outperforming over three years
 Net new business £24.8bn (2013: £7.9bn)
 Assets under management up 14% to £300.0bn (2013: £262.9bn)
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2014 Annual Results | March 2015
Asset Management
Higher gross and net flows
Net flows by channel £bn
 Gross inflows £85.1bn (2013: £70.2bn)
25
20
 Net inflows £24.3bn (2013: £9.4bn)
15
 Strong results across channels and regions
10
 Growth driven by Multi-asset, Fixed Income and Equities
5
0
2013
2014
Institutional
Intermediary
Net flows by region £bn
25
20
15
10
5
0
(5)
2013
UK
2
2014
Europe
Asia Pacific
Americas
2014 Annual Results | March 2015
Institutional
Assets under management: £171.1bn (2013: £144.3bn)
Net flows by asset class £bn
 Net inflows £17.6bn (2013: £4.6bn)
20
of which Friends Life £12.0bn
 Diversified across Multi-asset, Equities,
Fixed Income
 Strong results in UK, Asia Pacific, Europe
16
12
8
4
0
(4)
2013
Equities
3
Multi-asset
2014
Fixed Income
EMD/Commodities/Real Estate
2014 Annual Results | March 2015
Intermediary
Assets under management: £97.8bn (2013: £88.5bn)
Net flows by asset class £bn
 Net inflows £6.7bn (2013: £4.8bn)
 87% in branded funds
 Strong flows in continental Europe and Asia Pacific
 Income theme in Multi-asset, Fixed Income, Equities
8
7
6
5
4
3
2
1
0
(1)
(2)
Equities
4
2013
Multi-asset
Fixed Income
2014
EMD/Commodities/Real Estate
2014 Annual Results | March 2015
Equities
Assets under management: £129.6bn (2013: £119.6bn)
 Net inflows £4.5bn
 Emerging markets, Asia, Japan, Dividend Maximiser
 76% of AUM outperforming over 3 years
 Good pipeline of new products
 Strengthened capability in Global and International
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2014 Annual Results | March 2015
Multi-asset
Assets under management: £72.0bn (2013: £52.3bn)
 Net inflows £16.9bn
 Validates focus on investment outcomes/solutions: income
de-risking
risk controlled growth
 88% of AUM outperforming over 3 years
 New initiatives in wealth preservation, emerging markets, liquid alternatives
6
2014 Annual Results | March 2015
Fixed Income
Assets under management: £51.1bn (2013: £43.4bn)
 Net inflows £4.7bn (2013: £0.1bn)
 Strong flows in euro corporates, global multi-sector
 83% of AUM outperforming over 3 years
 STW fully integrated and maintained top performance track record
 Key product areas reaching 3-year track records
 Well positioned for continued growth
7
2014 Annual Results | March 2015
Wealth Management
Assets under management: £31.1bn (2013: £30.1bn)
 Net revenues up 42% to £213.5m (2013: £150.0m)
performance fees and release of loan loss provision: £9.0m
 Profit before tax and exceptional items up 80% to £61.7m (2013: £34.3m)
 Full year from Cazenove Capital
 Integration completed
 Net inflows £0.5bn (2013: net outflows £1.5bn)
 Targeting: 2-3% net new business growth
65bps revenue margin
70% cost:income ratio
8
2014 Annual Results | March 2015
Schroders
2014 Results
5 March 2015
Richard Keers Chief Financial Officer
Financial highlights
Net revenue, including performance fees (£m)
1,600
1,400
1,200
1,000
800
600
400
200
0
Profit before tax (£m)
1,531
1,408
1,153
38
1,135
81
37
Exceptional items (£m)
600
500
29
565.2
507.8
48.1
60.3
400
300
200
1,115
1,106
1,327
1,494
2011
2012
2013
2014*
100
0
407.3
360.0
447.5
517.1
2011
2012
2013
2014
* Includes exceptional items.
Diluted earnings per share before exceptional items (pence)
200
150
100
50
0
10
111.9
101.3
144.6
161.5
2011
2012
2013
2014
Dividend per share (pence)
90
80
70
60
50
40
30
20
10
0
39
43
58
78
2011
2012
2013
2014
2014 Annual Results | March 2015
Net revenue
Increase of £123m
£m
Net revenue
1,408
Markets and FX
33
Net new business
57
123
New business from acquisitions
66
Wealth
Management
150
Performance fees
(44)
Other revenue*
11
Wealth
Management
213
Asset
Management
1,247
2013
Asset
Management
1,304
Group segment
11
Group segment
11
* Includes exceptional items.
11
Net revenue
1,531
2014 Annual Results | March 2015
2014
Exceptional
items
3
Asset Management net revenues (1)
£m
583
600
500
557
28
35
489
24
400
300
555
522
465
200
100
0
2012
2013
Institutional
12
2014
Performance fees
2014 Annual Results | March 2015
Asset Management net revenues (2)
Net revenue margins, excluding performance fees, at 52 bps
£m
800
700
6
45
600
526
500
721
690
4
489
24
583
28
557
35
400
715
645
300
200
522
465
555
522
100
0
2012
2013
Institutional
13
Intermediary
2014
Performance fees
2014 Annual Results | March 2015
Wealth Management net revenues
Net revenue margins, excluding performance fees, 67 bps* (2013: 64 bps)
£m
240
213.5
14.6
190
150.0
35.1
13.6
140
94.4
26.7
13.8
19.8
90
154.8
109.7
40
68.7
(7.9)
(10)
2012
Management fees
Transaction fees
2013
Net banking interest income
2014
Loan loss (provisions)/net recoveries and performance fees
* Excluding net loan loss recoveries.
14
2014 Annual Results | March 2015
9.0
Profit before tax and exceptional items
Increase of £57m
£m
Net revenue
120
Profit before tax
and exceptional items
508
Compensation costs
(35)
Profit before tax
Net finance income/JVs and
and exceptional items
associates
565
1
Wealth
Management
62
Other costs
(29)
Wealth
Management
34
Asset Management
499
Asset Management
469
2013
15
Group segment
5
Group segment
4
2014
2014 Annual Results | March 2015
Operating expenses
Before exceptional items
2014
£m
2013
Asset
Management &
Group
Compensation costs
652.5
592.9
94.9
687.8
+5%
Other costs
254.7
224.6
55.9
280.5
+10%
Depreciation and amortisation
12.5
15.0
1.0
16.0
+28%
Total
919.7
832.5
151.8
984.3
+7%
Headcount
3,528
2,962
594
3,556
+1%
%
2013
2014
Compensation cost: net revenue ratio
46%
45%
Cost: net revenue ratio
65%
64%
16
Wealth
Management
Total
2014 versus 2013
2014 Annual Results | March 2015
Exceptional items
2014
£m
Asset Management
Wealth
Management
Group
Total
Integration and restructuring costs
(3.7)
(8.3)
-
(12.0)
Amortisation of acquired intangible assets
(13.9)
(9.2)
-
(23.1)
Deferred compensation arising from acquisitions
-
-
(12.9)
(12.9)
Other items
-
(2.9)
2.8
(0.1)
(17.6)
(20.4)
(10.1)
(48.1)
Total
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2014 Annual Results | March 2015
Group segment before exceptional items
£m
2013
2014
£m
2013
2014
Net revenue
10.4
11.4
Investment capital return
16.3
20.9
Operating expenses
(19.1)
(23.5)
Seed capital return
2.6
2.5
Other returns
4.0
7.0
Total returns
22.9
30.4
Operating expenses
(19.1)
(23.5)
3.8
6.9
Net finance income
12.1
11.6
Share of profit of associates
1.5
4.7
Group segment profit
4.9
4.2
Other comprehensive (losses)/gains
(1.1)
2.7
Total comprehensive income
3.8
6.9
18
Total comprehensive
income
2014 Annual Results | March 2015
Tax charge
Before
exceptional
items
Exceptional
items
After
exceptional
items
Before
exceptional
items
Exceptional
items
After
exceptional
items
Change
2014 v 2013
before
exceptional
items
Profit before tax – £m
507.8
(60.3)
447.5
565.2
(48.1)
517.1
+57.4 +11%
Tax – £m
(103.0)
8.2
(94.8)
(113.9)
10.0
(103.9)
+10.9 +11%
Profit after tax – £m
404.8
(52.1)
352.7
451.3
(38.1)
413.2
+46.5 +11%
Effective tax rate
20.3%
13.6%
21.2%
20.2%
20.8%
20.1%
Basic earnings per share
149.9p
(19.3)p
130.6p
166.8p
(14.1p)
152.7p
2013
19
2014
+16.9p +11%
2014 Annual Results | March 2015
Movement in Group capital
Increase of £269m as at 31 December 2014
£m
Dividends
(178)
Defined benefit pension
scheme surpluses
37
Other
(3)
Profit after tax and
exceptional items
413
20
Group capital
2013
£2,269m
Group capital
2014
£2,538m
1 January 2014
31 December 2014
2014 Annual Results | March 2015
Group capital allocation
Increase of £269m as at 31 December 2014
£m
December
2013
December
2014
Investment capital breakdown (%)
Regulatory capital
603
673
Other operating capital
311
284
Investment capital*
515
725
Fixed income: cash and
government bonds
9%
6%
24%
Fixed income: corporate
investment grade
Fixed income: corporate high
yield
14%
Equities
Seed capital
182
163
9%
Multi-asset
2%
Other items**
658
693
36%
Other
Private equity
Statutory Group capital
2,269
2,538
* Includes RWC Partners Limited and Schroder Ventures Investments Limited associates.
** Comprises goodwill, intangible assets, pension scheme surpluses, other associates and joint ventures, and deferred tax.
21
2014 Annual Results | March 2015
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2014 Annual Results | March 2015
Forward-Looking Statements
This presentation may contain forward-looking statements with respect to the financial condition, performance and position,
strategy, results of operations and businesses of the Schroders Group. Such statements and forecasts involve risk and
uncertainty because they are based on current expectations and assumptions but relate to events and depend upon
circumstances in the future and you should not place reliance on them. Without limitation, any statements preceded or
followed by or that include the words ‘targets’, ‘plans’, ‘believes’, ‘expects’, ‘aims’, ‘will have’, ‘will be’, ‘estimates’ or
‘anticipates’ or the negative of these terms or 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 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 forecast, estimate or projection of future financial
performance.
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2014 Annual Results | March 2015