Schroders
2014 Half-Year Results
31 July 2014
Michael Dobson Chief Executive
H1 2014
Record results
 Profit before tax and exceptional items £261.5m (H1 2013: £228.0m)
 72% of funds outperforming over 3 years
 Net inflows £4.8bn (H1 2013: £4.5bn)
 Assets under management £271.5bn (30 June 2013: £235.7bn)
 Interim dividend 24.0 pence per share (interim dividend 2013: 16.0 pence)
1
2014 Half-Year Results | July 2014
Net inflows £4.8bn
Diversified by channel, region and asset class
£bn
£bn
6.0
6.0
Channel
Region
Asset class
5.0
5.0
4.0
4.0
3.0
2.0
3.0
1.0
2.0
0.0
1.0
(1.0)
(2.0)
0.0
H1 2013
H2 2013
Net new business
H1 2014
H1 2014
H1 2014
Wealth Management
Asia Pacific
Intermediary
Europe
Institutional
UK
Americas
2
2014 Half-Year Results | July 2014
H1 2014
Wealth Management
Fixed Income
Multi-asset
Equities
Property
EMD & Commodities
Institutional
Assets under management: £148.0bn (end 2013: £144.3bn)
By asset class
 Slowdown in funding of new mandates at £11.4bn
£bn
2.0
 Outflows in Commodities, Global Equities
 Strong performance in Multi-asset, Emerging Market
Equities
1.0
 Net inflows £0.7bn
0.0
 Significant pipeline of business won but not yet funded
 STW integration completed
(1.0)
(2.0)
Q1 2014
Property
3
Multi-asset
Q2 2014
Fixed Income
Equities
EMD & Commodities
2014 Half-Year Results | July 2014
Intermediary
Assets under management: £92.8bn (end 2013: £88.5bn)
By asset class
 High level of gross sales at £23.3bn
£bn
4.0
 Net inflows £3.8bn
 Predominantly in branded funds
 Net inflows in Multi-asset, Equities and Fixed Income
3.0
2.0
 Strong performance in continental Europe
 Positive flows in Asia and UK
1.0
0.0
(1.0)
Q1 2014
Property
4
Fixed Income
Q2 2014
Multi-asset
Equities
EMD & Commodities
2014 Half-Year Results | July 2014
Wealth Management
Assets under management: £30.7bn (end 2013: £30.1bn)
 Net revenues £100.5m (H1 2013: £53.5m)
 Profit before tax £26.3m (H1 2013: £10.6m)
 Q2 net inflows £0.3bn
 Cazenove Capital integration plan on track
 Transformed market position and contribution in UK
5
2014 Half-Year Results | July 2014
Schroders
2014 Half-Year Results
31 July 2014
Richard Keers Chief Financial Officer
Financial highlights – 50% increase in interim dividend
Net revenue, including performance fees (£m)
800
600
645.1
544.0
Profit before tax and exceptional items (£m)
728.6
11.8
300
8.4
228.0
200
10.1
27.6
6.3
150
400
100
200
0
261.5
250
533.9
633.3
720.2
H1 2012
H1 2013
H1 2014
Diluted earnings per share excluding exceptional items (pence)
80
50
0
177.4
221.7
233.9
H1 2012
H1 2013
H1 2014
Dividend per share (pence)
25
20
70
15
60
10
50
40
7
5
49.2
64.1
74.5
H1 2012
H1 2013
H1 2014
0
13
16
24
H1 2012
H1 2013
H1 2014
2014 Half-Year Results | July 2014
Net revenue – driven by investment returns, organic growth and
acquisitions
Increase of £84m
£m
Net new business
25
Net revenue
645
Markets & FX
3
91
New business from
acquisitions 66
Other
(7)
Net revenue
729
Performance fees
(3)
Wealth Management
101
Wealth Management
53
Asset
Management
586
H1 2013
8
Asset
Management
621
Group Segment
6
Group Segment
7
2014 Half-Year Results | July 2014
H1 2014
Asset Management net revenues – continued growth
Net revenue margins, excluding performance fees, at 52 bps (FY 2013: 53 bps)
£m
400
379.5
310.5
300
347.2
44.9
350
0.2
282.0
275.2
11.6
6.3
23.5
273.8
250
200
150
345.2
334.6
310.3
263.6
267.5
258.5
100
50
0
H1 2013
H2 2013
Institutional
9
Intermediary
H1 2014
Performance fees
2014 Half-Year Results | July 2014
2.0
Wealth Management net revenues – up 88% supported by Cazenove
Capital acquisition
Net revenue margins 66bps (FY 2013: 64 bps)
£m
120
100.5
96.5
100
6.5
7.4
60
53.5
6.2
40
11.4
20
35.9
0
H1 2013
Management fees
10
17.0
15.3
80
73.8
77.0
H2 2013
H1 2014
Transaction fees
Net banking interest income
2014 Half-Year Results | July 2014
Profit before tax and exceptional items – 15% increase reflecting
strong business performance
Increase of £34m
£m
350
Net revenue
84
Profit before tax and
exceptional items
261.5
300
250
Wealth
Management
200
10.6
Profit before tax and
exceptional items
228.0
Compensation costs
(35)
Other costs
(17)
Wealth
Management
26.3
Net finance income/
JVs & associates
2
150
100
Asset
Management
235.1
Asset
Management
212.1
50
0
H1 2013
11
Group
Segment
5.3
Group
Segment
0.1
H1 2014
2014 Half-Year Results | July 2014
Operating expenses – key ratios in line with guidance
H1 2014
H1 2013
H2 2013
Asset
Management &
Group
Compensation costs
305.9
346.6
294.7
46.2
340.9
+11%
Other costs
114.2
140.5
102.1
27.5
129.6
+13%
Depreciation
6.3
6.2
7.1
0.5
7.6
+21%
Total
426.4
493.3
403.9
74.2
478.1
+12%
Headcount
3,140
3,528
2,910
630
3,540
+13%
£m
12
H1 2013
FY 2013
H1 2014
Compensation cost:operating revenue ratio
48%
46%
47%
Cost:net revenue ratio
66%
65%
66%
Wealth
Management
Total
H1 2014 versus H1 2013
2014 Half-Year Results | July 2014
Exceptional items
H1 2014
£m
Asset Management
Wealth
Management
Group
Total
Integration costs
1.0
3.8
-
4.8
Amortisation of acquired intangible assets – Cazenove and
STW
5.9
5.1
-
11.0
Amortisation of acquired intangible assets – other
1.1
-
-
1.1
-
-
9.1
9.1
Costs of closure of Opus commodities business
1.6
-
-
1.6
Total
9.6
8.9
9.1
27.6
Deferred compensation arising directly from acquisitions
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2014 Half-Year Results | July 2014
Group segment before exceptional items
H1 2013
£m
H1 2014
£m
Net revenue
5.9
7.1
Operating expenses
(7.5)
(12.7)
Net finance income
7.4
5.3
Share of (loss)/profit of associate
(0.5)
0.4
Group segment profit before exceptional items
5.3
0.1
Other comprehensive income
(2.1)
1.8
3.2
1.9
Segment disclosure
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2014 Half-Year Results | July 2014
Tax charge and earnings per share
H1 2014
Change
H1 2014 v H1 2013
before
exceptional items
H1 2013
Before
exceptional items
Before
exceptional items
Exceptional items
Total
Profit before tax – £m
228.0
261.5
(27.6)
233.9
33.5
+15%
Tax – £m
(48.0)
(53.5)
5.8
(47.7)
(5.5)
+11%
Profit after tax – £m
180.0
208.0
(21.8)
186.2
28.0
Effective tax rate
21.1%
20.5%
21.0%
20.4%
Basic earnings per share
66.3p
77.1p
(8.1)p
69.0p
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2014 Half-Year Results | July 2014
10.8p
+16%
+16%
Movement in Group capital
Increase of £54m as at 30 June 2014
Billions
£m
Profit after tax
186
Share purchases
(45)
Dividends
(113)
Foreign exchange
(15)
Other
41
Group capital
H1 2014
£2,323m
Group capital
H2 2013
£2,269m
30 June 2014
31 December 2013
16
2014 Half-Year Results | July 2014
Group capital allocation – Strong capital position maintained
Increase of £54m as at 30 June 2014
£m
H1
2013
H2
2013
H1
2014
Regulatory capital
554
603
617
Investment capital breakdown (%)
Government-guaranteed bonds
Surplus operating capital
325
468
437
Seed capital*
201
182
182
Investment capital*
876
495
573
Other
(intangibles etc.)
229
521
514
31%
30%
Multi-asset
6%
Legacy private equity
33%
Fixed income
Statutory Group capital
2,185
2,269
2,323
*Not included in AUM
17
2014 Half-Year Results | July 2014
Schroders
2014 Half-Year Results
31 July 2014
Michael Dobson Chief Executive
Outlook
 Good levels of net inflows in July in Intermediary and Institutional
 Uncertainty around retail investor demand in short term
 Significant Institutional pipeline
 Seeking efficiencies to offset fee pressures and costs of regulatory change
 Opportunities for long-term growth
19
2014 Half-Year Results | July 2014
Forward-Looking Statements
These presentation slides may contain forward-looking statements with respect to the financial condition, performance and
position, strategy, results of operations and businesses of the 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. Without limitation, any statements preceded 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 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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2014 Half-Year Results | July 2014