Schroders
2013 Half-Year Results
8 August 2013
Michael Dobson Chief Executive
H1 2013
Volatile background, strong results
 Profit before tax and exceptional items up 29% to £228.0m (H1 2012: £177.4m)
 Interim dividend up 23% to 16.0 pence per share (interim dividend 2012: 13.0 pence)
 67% of funds outperforming over 3 years
 Net inflows up 67% to £4.5bn (H1 2012: £2.7bn)
 Assets under management up 21% to £235.7bn (30 June 2012: £194.6bn)
 Acquisition of Cazenove Capital completed 2 July
1
2013 Half-Year Results | August 2013
Acquisition of Cazenove Capital
Scale in Wealth Management, complementary strategies in Investment Funds
 £20.1bn AUM


£13.2bn Wealth Management
£6.9bn Investment Funds
 £1.6bn net inflows in H1 2013


£0.4bn Wealth Management
£1.2bn Investment Funds
 In Private Banking



Adds scale in UK
Broadens client offering
Complementary client base
 In Asset Management



Extends product range in UK Intermediary
Strong performance in UK and European equities, multi-manager, fixed income
Opportunities to leverage Schroders distribution
Pro forma £255.8bn AUM at 30 June 2013
30.1
86.1
139.6
 Cost synergies £12-15m
Institutional
Intermediary
Cazenove Capital AUM and net inflows not included in Schroders’ Interim results 2013
2
2013 Half-Year Results | August 2013
Private Banking
Cazenove Capital H1 2013
Strong revenue growth
Net revenues (£m) and net revenue margins (bps)
66 bps
70
+21%
60
65 bps
50
+10%
40
30
68 bps
61.6
+53%
50.7
20
37.5
10
41.4
20.2
13.2
0
Investment Funds
Wealth Management
H1 2012
3
Total
H1 2013
2013 Half-Year Results | August 2013
Diversified sources of new business
H1 2013: net new business £4.5bn
By channel
By region
By asset class
£bn
8
8
8
7
7
7
6
6
6
5
5
5
4
4
4
3
3
2
3
2
2
1
1
0
0
0
-1
-1
-2
-2
-1
4
1
H1 2012
H2 2012
Institutional
Intermediary
H1 2013
Private Banking
-3
H1 2012
UK
Europe
H2 2012
Asia-Pacific
H1 2013
Americas
H1 2012
H2 2012
Equities
Fixed Income
Property
2013 Half-Year Results | August 2013
H1 2013
Multi-asset
EMD/Commodities
Private Banking
Institutional
Assets under management: £139.6bn (end 2012: £123.7bn)
By asset class
 £14.2bn of new business in H1
 H1 net inflows £2.1bn


Asia-Pacific, UK
Multi-asset, Equities, Fixed Income
 Pick up in outflows in Q2



Asset allocation
US client diversifying
STW
 Net revenue margins unchanged at 39 bps
 Continue to see opportunities globally
£bn
5
4
H1: £2.1bn
3
2
1
0
-1
-2
Q3 2012
Equities
Q4 2012
Multi-Asset
Q1 2013
Fixed Income
Net revenue margins excluding performance fees
5
2013 Half-Year Results | August 2013
Q2 2013
EMD/Property
Intermediary
Assets under management: £79.2bn (end 2012: £72.0bn)
By asset class
 £22.6bn of gross sales in H1
 Sales slowed, redemptions picked up in Q2

H1: £2.7bn
4
UK alpha products
 Net inflows £2.7bn



£bn
5
Continued success of Multi-asset
Strong result in Asia-Pacific, Europe, US
Outflows in UK
 Net revenue margins unchanged at 79 bps
3
2
1
0
 New UK alpha team
 Complementary Cazenove funds
-1
-2
Q3 2012
Equities
Q4 2012
Multi-Asset
Q1 2013
Fixed Income
Net revenue margins excluding performance fees
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2013 Half-Year Results | August 2013
Q2 2013
EMD/Property
Private Banking
Assets under management: £16.9bn (end 2012: £16.3bn)
 Marginal increase in revenues and costs
 Profit before tax £10.6m (H1 2012: £10.4m)
 Net outflows £0.3bn


Withdrawals from continuing client relationships
Net new/lost clients positive
 New leadership in London and Switzerland
 Major opportunity through Cazenove Capital integration






7
Significantly increased scale in UK
Financial planning capability
Broadens investment offering
Banking services for Cazenove clients
Encouraging response from clients
Cost synergies
2013 Half-Year Results | August 2013
Schroders
2013 Half-Year Results
8 August 2013
Richard Keers Chief Financial Officer
Financial highlights
Net revenue, including performance fees (£m)
Profit before tax and exceptional items (£m)
800
250
600
645.1
593.2
14.6
544.0
11.8
10.1
228.0
200
150
400
100
200
0
50
578.6
533.9
633.3
H1 2011
H1 2012
H1 2013
Diluted earnings per share excluding exceptional items (pence)
70
0
215.7
177.4
221.7
H1 2011
H1 2012
H1 2013
Dividend per share (pence)
20
16
60
12
8
50
4
40
9
58.7
49.2
64.1
H1 2011
H1 2012
H1 2013
0
13
13
16
H1 2011
H1 2012
H1 2013
2013 Half-Year Results | August 2013
6.3
Net revenue
Increase of £101m
£m
Net revenue
544
Private Banking
53
Net new business
25
Performance fees
2
STW, Group segment
and other
13
Net revenue
645
Private Banking
53
Markets and FX
61
Asset
Management
586
Asset
Management
491
Group Segment 0
Group Segment 6
H1 2012
10
H1 2013
2013 Half-Year Results | August 2013
Asset Management net revenues
Net revenue margins, excluding performance fees, unchanged at 54 bps
£m
350
300
250
256.3
14.4
275.2
11.6
241.9
263.6
H2 2012
H1 2013
233.0
10.0
200
150
100
223.0
50
0
H1 2012
Institutional
11
Performance fees
2013 Half-Year Results | August 2013
Asset Management net revenues
Net revenue margins, excluding performance fees, unchanged at 54 bps
£m
350
310.5
300
256.3
258.0
250
233.0
10.0
0.1
275.2
267.5
3.9
14.4
11.6
200
310.3
150
257.9
100
263.6
241.9
263.6
223.0
50
0
H1 2012
H2 2012
Institutional
12
Intermediary
H1 2013
Performance fees
2013 Half-Year Results | August 2013
0.2
Private Banking net revenues
Net revenue margins 63bps (H1 2012: 65 bps)
0
£m
70
60
53.5
52.6
50
40
41.8
7.1
6.2
6.7
10.8
11.4
9.0
30
20
34.7
35.9
34.0
10
0
(7.9)
-10
H1 2012
Management fees
H2 2012
Transaction fees
Net banking interest income
H1 2013
Loan loss provisions
H2 2012 fair value movement on loans held at fair value and other loan losses, includes £1.8m charged to operating expenses in H1 2012
13
2013 Half-Year Results | August 2013
Profit before tax and exceptional items
Increase of £51m
£m
Profit before tax and
exceptional items
228
Compensation costs
(50)
Profit before tax
177
Private
Banking
10
Other costs
(1)
Net finance income/
JVs & associates
1
Net revenue
101
Asset
Management
212
Asset
Management
175
Group Segment
(8)
H1 2012
14
Private
Banking
11
Group Segment
5
H1 2013
2013 Half-Year Results | August 2013
Operating expenses
H1 2013
H1 2012
H2 2012
Asset
Management &
Group
Compensation costs
256.4
289.3
279.4
26.5
305.9
49.5
Other costs
112.9
120.6
98.0
16.2
114.2
1.3
6.3
5.7
6.1
0.2
6.3
Total
375.6
415.6
383.5
42.9
426.4
50.8
+14%
Headcount
2,957
3,011
2,790
341
3,140
183
+6%
£m
Depreciation and amortisation
%
15
H1 2012
H2 2012
H1 2013
Compensation cost:operating revenue ratio
47%
49%
48%
Cost:net revenue ratio
69%
70%
66%
Private
Banking
Total
H1 2013 versus H1 2012
+19%
+1%
-
2013 Half-Year Results | August 2013
Exceptional items
STW and Cazenove Capital
H1 2013
£m
Asset Management
Group
Total
Acquisition costs
-
4.0
4.0
Integration costs
-
1.5
1.5
0.3
-
0.3
-
0.5
0.5
0.3
6.0
6.3
Amortisation of acquired client relationships
Deferred compensation arising from acquisitions
Total
STW: completed on 2 April 2013
Cazenove Capital: completed on 2 July 2013
 £43.5m acquisition cost
 £413m final acquisition cost
 £11.7m Intangible asset and 10 year amortisation
 Valuation of intangible asset on-going
 £6.5m maximum deferred compensation charge
over 4 years
 £29m maximum deferred compensation charge
over 4 years
16
2013 Half-Year Results | August 2013
Group segment before exceptional items
Investment capital, governance, management and other
H1 2012
(£m)
H1 2013
(£m)
0.4
5.9
Operating expenses
(14.4)
(7.5)
Net finance income
6.3
7.4
Share of JVs and associates
(0.5)
(0.5)
Group segment (loss)/profit before exceptional items
(8.2)
5.3
Other comprehensive income
7.3
(2.1)
(0.9)
3.2
Segment disclosure
Net revenue
17
2013 Half-Year Results | August 2013
Tax charge and earnings per share
H1 2013
Change
H1 2013 v H1 2012
before
exceptional items
H1 2012
Before
exceptional items
Exceptional items
Total
Profit before tax – £m
177.4
228.0
(6.3)
221.7
50.6
+29%
Tax – £m
(40.3)
(48.0)
0.5
(47.5)
7.7
+19%
Profit after tax – £m
137.1
180.0
(5.8)
174.2
42.9
+31%
Effective tax rate
22.7%
21.1%
-
21.4%
Basic earnings per share
50.7p
66.3p
(2.1)p
64.2p
15.6
+31%
18
2013 Half-Year Results | August 2013
Movement in Group capital
Increase of £115m as at 30 June 2013
£m
Profit after tax
174
Share purchases
(36)
Dividends
(80)
Exchange differences
£27m
Other
£30m
Group capital
H1 2013
£2,185m
Group capital
H2 2012
£2,070m
30 June 2013
31 December 2012
19
2013 Half-Year Results | August 2013
Group capital allocation
Increase of £115m as at 30 June 2013
£m
Asset Management
and Private Banking
operational capital
H1
2012
H2
2012
H1
2013
864
957
879
Investment capital breakdown (%)
Government guaranteed bonds
5% 3%
19%
Seed capital: Alpha exposures
Investment capital*
908
926
1,077
19%
Other
(intangibles etc.)
Statutory Group capital
167
187
229
1,939
2,070
2,185
54%
Cash deposits, CDs and
commercial paper
Multi-asset
Legacy private equity
Pro forma Investment capital £664m after Cazenove Capital acquisition
*Not included in AUM
20
2013 Half-Year Results | August 2013
Schroders
2013 Half-Year Results
8 August 2013
Michael Dobson Chief Executive
Outlook and future priorities
Focus on organic growth/leveraging acquisitions
 Financial market volatility and investor uncertainty will continue
 Competitive advantage of:






Talent
Performance
Breadth of product range
Distribution strengths
Global footprint
Scale
 Integration of Cazenove Capital and STW
 On-going programme to strengthen business
 Further opportunities for growth long term
22
2013 Half-Year Results | August 2013
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 forecast, estimate or projection of future financial performance.
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2013 Half-Year Results | August 2013