Press Rele
ease
Sc
chrod
ders plc
8 Au
ugust 201
13
Half-year res
sults to 30
3 June 20
013 (unau
udited)

Profit before tax and excceptional item
ms up 29 per cent. to £22
28.0 million1 (H1
(
2012: £1177.4 million)

Profit before tax up 25 pe
er cent. to £2
221.7 million (H1 2012: £177.4
£
million
n)

end up 23 pe
er cent. to 16
6.0 pence pe
er share (inte
erim dividend
d 2012: 13.0 pence per share)
Interim divide

Net inflows u
up 67 per cen
nt. to £4.5 billion (H1 201
12: £2.7 billio
on)

Assets
A
unde
er manageme
ent up 21 perr cent. to £23
35.7 billion (3
30 June 2012: £194.6 bil lion)
Six m
months ended
d
30 June 2013
3
£m
m
Six mo
onths ended
30 June 2012
£m
Year
Y
ended
31 Dece
ember 2012
£m
212.1
1
175.2
348.5
10.6
6
10.4
11.8
(8.2))
(0.3)
Proffit/(loss) before tax and ex
xceptional items
Asset Ma
anagement
Private B
Banking
Group
5.3
3
Tota
al profit beforre tax and exc
ceptional item
ms
228.0
0
177.4
360.0
Tota
al profit beforre tax
221.7
7
177.4
360.0
Earn
nings per sha
are (pence)
64.2
2
50.7
104.7
Divid
dend (pence))
16.0
0
13.0
43.0
Mich
hael Dobson, Chief Executtive, commented, ‘We are p
pleased with these strong results and thhe overall perrformance of the
t
firm, reflecting the
e benefits of our
o diverse, gllobal businesss. Against a volatile
v
backgrround, we del
elivered comp
petitive
perfformance forr clients, £4.5
5 billion of ne
et new busine
ess and a 29
9 per cent. increase in proofit.
We are confiden
nt that the ad
dditions of Ca
azenove Cap
pital in the UK
K and STW Fixed
F
Incomee in the US will
w strengthe
en
our offerings for clients and create
c
value for sharehollders.
We continue to ssee good lon
ng-term grow
wth prospectss and this is reflected
r
in th
he 23 per ceent. increase in our interim
m
divid
dend.’
Con
ntacts:
Schroders
Emma
E
Holde
en
Head
H
of Corp
porate Communications
+44 (0) 2007 658 2329
emma.hoolden@schrod
ders.com
Brun
nswick Grou
up
Anita
A
Scott
Eilis
E Murphy
+44 (0) 2007 404 5959
schroderss@brunswick
kgroup.com
1
1
Plea
ase refer to note 2 and note 3 on page 12 for a deffinition and furthe
er details of excep
ptional items
Ma
anagem
ment rep
port
Fina
ancial markets made significant gains in the firstt five months
s of 2013 witth investors continuing to
t favour equ
uities
overr low-yielding
g bonds and
d cash. We then saw a sharp corrrection in mo
ost markets,, beginning in late Mayy and
exte
ending throug
gh June, as the Federall Reserve in the US indicated its inttention to unnwind the qu
uantitative ea
asing
prog
gramme whe
en economic growth picks
s up and, at the same tim
me, concerns
s grew over the slowdow
wn in China. After
the strong perfo
ormance of equities
e
in la
ate 2012 an
nd early 2013 investors took profits and the ass
set management
indu
ustry saw high levels of net redemptio
ons from equ
uity mutual fu
unds in June.
Reflecting this trrend, we gen
nerated net in
nflows of £5..6 billion in th
he first quartter followed bby £1.1 billio
on of net outfflows
in th
he second q
quarter, all of which occu
urred in Jun
ne, resulting in £4.5 billio
on of net infflows in the first half overall.
Asse
ets under m
management at the end of
o June were
e £235.7 billion including £6.6 billionn from STW
W (30 June 2012:
2
£194
4.6 billion).
alf increased
Proffit before taxx and excepttional items in
i the first ha
d by 29 per cent. to £2228.0 million (H1 2012: £1
177.4
millio
on). Profit be
efore tax and
d after exceptional items w
was up 25 per cent. at £2
221.7 millionn (H1 2012: £177.4
£
million).
Ass
set Managem
ment
Asse
et Managem
ment net revvenue increased 19 pe
er cent. to £585.7
£
millio
on (H1 201 2: £491.0 million)
m
inclu
uding
perfo
ormance fee
es of £11.8 million
m
(H1 2012:
2
£10.1 m
million). Net revenue ma
argins, excludding perform
mance fees, were
w
unch
hanged at 54
4 basis points. Profit befo
ore tax increa
ased 21 per cent. to £211
1.8 million (H
H1 2012: £17
75.2 million).
Inve
estment perfo
formance rem
mains comp
petitive with 67 per centt. of assets under manaagement outperforming their
benc
chmark or pe
eer group ovver three years. Net inflows in In
nstitutional were
w
£2.1 billiion across m
multi-asset, equities
e
and fixed incomee, with a stro
ong result in Asia
Pacific. Assets under management in In
nstitutional att the end of June
J
were £139.6 billionn (31 Decemb
ber 2012: £1
123.7
billio
on).
Net inflows in In
ntermediary were
w
£2.7 billion with hig
gh levels of net
n inflows in
n branded fuunds offsettin
ng net outflow
ws in
our lower margin
n sub-adviso
ory business. Net sales w
were concen
ntrated in mu
ulti-asset andd, by region, Asia Pacificc and
conttinental Euro
ope. Cazenovve Capital’s investment ffund range, which will be
e included fro
rom the third quarter, willl add
com
mplementary strategies with
w
strong performance
e across UK
K and Europ
pean equitiees, multi-ma
anager and fixed
inco
ome. Assets under mana
agement in Intermediary at the end of
o June were
e £79.2 billio n (31 Decem
mber 2012: £72.0
£
billio
on).
Priv
vate Bankin
ng
Net revenues in Private Banking were marginally
m
hig
gher at £53.5
5 million (H1 2012: £52.66 million) and
d profit before
e tax
was £10.6 millio
from
on (H1 2012
2: £10.4 million). Althoug
gh we gene
erated positiv
ve net businness flows, withdrawals
w
conttinuing clientt relationship
ps led to net outflows of £0.3 billion in
i the first ha
alf. Assets uunder manag
gement in Prrivate
Banking at the e
end of June were
w
£16.9 billion
b
(31 De
ecember 2012: £16.3 billion). The adddition of Ca
azenove Cap
pital’s
wea
alth managem
ment businesss materially
y increases tthe scale of our Private Banking
B
bussiness in the UK and extends
our offering
o
for p
private clientss.
Acq
quisitions
In April,
A
we completed the accquisition of STW. This sstrengthens our
o fixed inco
ome businesss and broad
dens the scop
pe of
our institutional business in the US. Th
he integration
n of STW with
w our existting fixed inccome capab
bility in the US
U is
prog
gressing welll.
In Ju
uly, we comp
pleted the accquisition of Cazenove
C
Ca
apital. Assetts under man
nagement at 30 June werre £20.1 billio
on of
whic
ch £13.2 billio
on was in we
ealth management and £
£6.9 billion in
n investment funds. Thesse will be included for the
e first
time
e in our third quarter repo
orted assets
s under mana
agement. Th
he response from Cazennove Capital clients has been
b
enco
ouraging and
d this combin
nation streng
gthens our po
osition in Priv
vate Banking
g and UK Inteermediary.
Thes
se two acquisitions we
ere unusual opportunitie
es to expand
d in areas of strategic importance
e but we remain
com
mmitted to gro
owing our bu
usiness organ
nically over tthe long term
m.
2
Gro
oup
The Group segm
ment compriises central costs and re
eturns on investment ca
apital, includ ing seed capital deploye
ed in
build
ding an inve
estment trackk record in new
n
productss. Profit before tax and
d exceptionaal items was £5.3 million
n (H1
2012
2 loss: £8.2 m
million). Exce
eptional items
s relating to th
he acquisitions of STW and
d Cazenove C
Capital were £6.0
£ million.
Sharreholders’ equ
uity at the end
d of June was
s £2.2 billion ((31 Decembe
er 2012: £2.1 billion).
Diviidend
Reflecting these
e results, ourr confidence in the long-tterm growth prospects and
a the Com pany’s financial strength
h, the
Board has decla
ared an interrim dividend of 16.0 pencce per share
e (interim div
vidend 2012:: 13.0 pence
e), an increasse of
23 per
p cent. The
e dividend will be payable
e on 26 Septe
ember 2013 to sharehold
ders on the rregister at 16
6 August 2013.
Outtlook
The prospect of tthe easy mon
netary policy of
o recent yea
ars being unw
wound is likely
y to weigh onn markets and
d investor dem
mand
will therefore
t
rem
main unpredicctable. Howev
ver, we contin
nue to streng
gthen our bus
siness in the UK and interrnationally an
nd we
belie
eve this will lead to further opportunities
o
for growth in the long term
m.
Cop
pies of today's announcem
ment are ava
ailable on the
e Schroders website: ww
ww.schroderrs.com.
Mich
hael Dobson, Chief Execcutive, and Richard
R
Keerss, Chief Fina
ancial Officerr, will host a presentation
n and webcasst for
the investment ccommunity, to
t discuss th
he Group’s h
half-year resu
ults at 10.00
0am BST on Thursday, 8 August 201
13 at
31 Gresham S
Street, Lond
don, EC2V 7QA. The webcast can be view
wed live at www.schro
oders.com/ir and
www
w.cantos.com
m. For individ
duals unable
e to participa
ate in the live
e webcast, a replay will be available
e from midda
ay on
Thursday 8 Augu
ust on www.schroders.co
om/ir.
Forw
ward-lookin
ng statemen
nts
Thes
se half-year results may contain certa
ain forward-lo
ooking statem
ments with re
espect to thee financial co
ondition, results of
operrations, strate
egy and businesses of the
e Schroders Group. Such
h statements and forecassts involve ris
sk and uncerttainty
beca
ause they are
e based on current expecta
ations and asssumptions but they relate to
o events and depend upon
n circumstancces in
the future
f
and you
u should not place
p
undue reliance
r
on th
hem. Without limitation, any
y statements preceded or followed
f
by or
o that
inclu
ude the wordss ‘targets’, ‘pla
ans’, ‘believes’, ‘expects’, ‘aims’ or ‘antticipates’ or th
he negative of these terms
s and other similar
term
ms are intende
ed to identify such forward-looking state
ements. There
e are a numb
ber of factors that could ca
ause actual re
esults
or de
evelopments to differ mate
erially from th
hose expresssed or implied
d by forward-looking statem
ments and fo
orecasts. Forw
wardlooking statementts and foreca
asts are based
d on the Direcctors’ current view and info
ormation know
wn to them at the date of these
t
half--year results. T
The Directorss do not make
e any underta
aking to updatte or revise an
ny forward-loooking stateme
ents, whetherr as a
resu
ult of new info
ormation, futu
ure events orr otherwise. N
Nothing in the
ese half-year results shouuld be constru
ued as a fore
ecast,
estim
mate or projecction of future
e financial perfformance.
3
Co
onsolida
ated inccome sta
atement
Notes
Reve
enue
4
Costt of sales
g
on finan
ncial instrumen
nts and
Net gains
other income
Net revenue*
r
es
Operrating expense
Operating profit
Six months ende
ed 30 June 20013
(unaudited)
Before
e
exceptionall Exceptiona
al
items
s
items***
To
otal
£m
m
£m
m
££m
815.6
6
8155.6
Six months
Year
nded
e
ended
en
30 June
J
31 Dece
ember
2012
2
2012
(unaudited)
(aud
dited)
£m
698.8
£m
1,4
425.4
(190.2
2)
-
(1900.2)
(16
65.6)
(3
329.7)
19.7
7
-
199.7
10.8
39.2
645.1
1
-
6455.1
54
44.0
1,1
134.9
(426.4
4)
(6.3)
(4322.7)
(375.6)
(7
791.2)
218.7
7
(6..3)
2122.4
168.4
3
343.7
Net finance
f
income
7.4
4
-
77.4
6.2
11.8
associates and
d joint
Sharre of profit of a
ventu
ures
1.9
9
-
11.9
2.8
4.5
Proffit before tax
Tax
5
Proffit after tax
Earn
nings per sha
are
Basic
Dilutted
*
**
4
6
6
228.0
0
(6..3)
2211.7
177.4
3
360.0
(48.0
0)
0.5
(477.5)
40.3)
(4
(76.8)
180.0
0
(5..8)
1744.2
137.1
2
283.2
64..2p
62..0p
50.7p
49.2p
10
04.7p
10
01.3p
66.3p
p
64.1p
p
(2.1))p
(2.1))p
No
on-GAAP measure of performance
Ple
ease refer to n
note 2 and note 3 on page 12 for a definitiion and furthe
er details of ex
xceptional item
ms
onsolida
ated sta
atement of com
mprehensive inc
come
Co
Note
es
Proffit for the periiod
Six months
m
ended
30
0 June
2013
(unau
udited)
£m
Six months
ended
30 June
2012
(unaudited)
£m
Y
Year
en
nded
31 Decem
mber
2
2012
(audited)
£m
174.2
137.1
283.2
Item
ms to be reclas
ssified to the
e income statement on
fulfillment of spec
cific conditions:
Net exchange
e
diffe
erences on tra
anslation of foreign
operrations after he
edging
27.2
(8.9)
(21.8)
Net fair
f value movvement arising
g from availablle-for-sale
finan
ncial assets
3.5
9.0
16.0
Net fair
f value movvement arising
g from availablle-for-sale
finan
ncial assets he
eld by associa
ates
(1.0)
1.1
1.5
29.7
1.2
(4.3)
(5.2)
(2.5)
(25.5)
(5.2)
(2.5)
(25.5)
5.1
(12.9)
10.4
(2.1)
0.3
(4.1)
3.0
(12.6)
6.3
Othe
er comprehen
nsive income
e/(losses) for the period
27.5
(13.9)
(23.5)
Tota
al comprehen
nsive income for the period net of tax
201.7
123.2
259.7
Recllassification tto the income
e statement:
Tran
nsfer to income
e statement on
n derecognitio
on or
impa
airment of available-for-sale financial asse
ets
Item
ms not to be re
eclassified to
o the income statement:
Actuarial gains/(losses) on defin
ned benefit pe
ension
emes
sche
Tax on items taken
n directly to otther comprehe
ensive
me
incom
5
12
Co
onsolida
ated sta
atement of finan
ncial position
30
3 June
2013
(una
audited)
£m
30 June
2012
(unaudited)
£m
31 Decemb
ber
20
012
(audite
ed)
£
£m
3,077.1
615.2
1,621.1
87.1
18.2
180.9
45.1
73.6
5,718.3
2,329.3
455.2
2,225.5
57.6
14.0
141.9
49.4
43.0
5,315.9
2,542
2.8
414
4.7
2,019
9.8
79
9.4
15
5.0
142
2.1
47
7.8
67
7.2
5,328
8.8
840.3
9,620.0
10,460.3
1
16,178.6
1
827.8
8,365.9
9,193.7
14,509.6
820
0.5
8,525
5.8
9,346
6.3
14,675
5.1
718.8
2,732.1
33.4
40.1
1.9
7.0
3,533.3
10,460.3
1
13,993.6
1
494.8
2,743.5
71.1
57.4
2.5
8.1
3,377.4
9,193.7
12,571.1
559
9.3
2,585
5.1
40
0.8
64
4.0
1
1.9
7
7.8
3,258
8.9
9,346
6.3
12,605
5.2
Nett assets
2,185.0
1,938.5
2,069
9.9
Equ
uity
2,185.0
1,938.5
2,069
9.9
No
otes
Ass
sets
Cas
sh and cash e
equivalents
Tra
ade and other receivables
Financial assets
Ass
sociates and jo
oint ventures
Pro
operty, plant and equipmentt
Goo
odwill and inta
angible assetss
Defferred tax
Rettirement bene
efit scheme surplus
12
Ass
sets backing unit-linked liiabilities
Cas
sh and cash e
equivalents
Financial assets
Tottal assets
Lia
abilities
Tra
ade and other payables
Financial liabilitie
es
Currrent tax
Pro
ovisions
Defferred tax
Rettirement bene
efit scheme deficits
Unit-linked liabiilities
Tottal liabilities
6
12
Consolidated statement of changes in equity
Associates
and joint
ventures
reserve
£m
25.5
Fair value
reserve
£m
25.6
Profit and
loss
reserve
£m
1,709.5
Total
£m
2,069.9
-
1.9
-
172.3
174.2
-
-
-
34.0
(6.8)
2.8
-
1.8
Share
capital
£m
282.5
Share
premium
£m
90.1
Profit for the period
-
-
-
Net exchange differences on translation of foreign operations
Net exchange differences on hedging of foreign operations
Net fair value movements on available-for-sale financial assets
taken to other comprehensive income
Net exchange differences on available-for-sale financial assets
Transfer to income statement on derecognition or impairment of
available-for-sale financial assets
Actuarial gains on defined benefit pension schemes
Tax on items taken directly to other comprehensive income
Other comprehensive income/(losses)
-
-
-
-
-
-
-
-
-
-
-
-
0.7
-
0.7
-
-
-
-
-
(5.2)
-
(5.2)
-
-
-
27.2
(1.0)
(1.7)
5.1
(2.1)
3.0
5.1
(2.1)
27.5
Shares issued
Share-based payments
Tax in respect of share schemes
Other movements in associates and joint ventures reserve
Dividends attributable to owners of the parent
Dividends attributable to non-controlling interests
Own shares purchased
Transactions with owners
-
0.1
0.1
(35.6)
(35.6)
-
(1.0)
(1.0)
-
24.2
6.3
(80.4)
(0.2)
(50.1)
0.1
24.2
6.3
(1.0)
(80.4)
(0.2)
(35.6)
(86.6)
282.5
90.2
24.0
(176.7)
129.0
(3.0)
22.4
23.9
(21.0)
1,813.7
2,185.0
Six months ended 30 June 2013 (unaudited)
At 1 January 2013
Transfers
At 30 June 2013
7
Own
shares
£m
(165.1)
Net
exchange
differences
£m
101.8
34.0
(6.8)
(1.0)
Associates
and joint
ventures
reserve
£m
25.8
Fair value
reserve
£m
34.9
Profit and
loss
reserve
£m
1,519.3
Total
£m
1,901.6
-
2.8
-
134.3
137.1
-
-
-
(11.7)
2.8
9.8
-
10.9
Share
capital
£m
282.5
Share
premium
£m
87.8
Profit for the period
-
-
-
Net exchange differences on translation of foreign operations
Net exchange differences on hedging of foreign operations
Net fair value movements on available-for-sale financial assets
taken to other comprehensive income
Net exchange differences on available-for-sale financial assets
Transfer to income statement on derecognition or impairment of
available-for-sale financial assets
Actuarial losses on defined benefit pension schemes
Tax on items taken directly to other comprehensive income
Other comprehensive (losses)/income
-
-
-
-
-
-
-
1.1
-
-
-
-
-
(0.8)
-
(0.8)
-
-
-
-
-
(2.5)
-
(2.5)
-
-
-
(8.9)
1.1
6.5
(12.9)
0.3
(12.6)
(12.9)
0.3
(13.9)
1.6
21.4
1.4
(69.4)
(41.3)
(86.3)
Six months ended 30 June 2012 (unaudited)
At 1 January 2012
Shares issued
Shares cancelled
Share-based payments
Tax in respect of share schemes
Dividends attributable to owners of the parent
Own shares purchased
Transactions with owners
Transfers
At 30 June 2012
8
0.2
(0.2)
282.5
Own
shares
£m
(172.5)
Net
exchange
differences
£m
123.8
(11.7)
2.8
1.4
1.4
(41.3)
(41.3)
-
-
-
0.2
21.4
1.4
(69.4)
(46.4)
89.2
44.9
(168.9)
114.9
(4.1)
25.6
41.4
(40.8)
1,553.8
1,938.5
Share
capital
£m
282.5
Share
premium
£m
87.8
Profit for the year
-
-
-
Net exchange differences on translation of foreign operations
Net exchange differences on hedging of foreign operations
Net fair value movements on available-for-sale financial assets taken
to other comprehensive income
Net exchange differences on available-for-sale financial assets
Transfer to income statement on derecognition or impairment of
available-for-sale financial assets
Actuarial gains on defined benefit pension schemes
Tax on items taken directly to other comprehensive income
Other comprehensive (losses)/income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Year ended 31 December 2012 (audited)
At 1 January 2012
Shares issued
Shares cancelled
Share-based payments
Tax in respect of share schemes
Dividends attributable to owners of the parent
Own shares purchased
Transactions with owners
Transfers
At 31 December 2012
9
0.5
(0.5)
282.5
2.3
2.3
90.1
Own
shares
£m
(172.5)
(41.7)
(41.7)
49.1
(165.1)
Net
exchange
differences
£m
123.8
Associates
and joint
ventures
reserve
£m
25.8
-
4.5
-
278.7
-
-
-
(28.3)
6.5
1.5
16.3
-
17.8
-
(0.1)
-
(0.3)
-
(25.5)
-
(25.5)
(28.3)
6.5
(0.2)
(22.0)
Fair value
Profit and
reserve loss reserve
£m
£m
34.9
1,519.3
Total
£m
1,901.6
283.2
1.5
(9.3)
10.4
(4.1)
6.3
10.4
(4.1)
(23.5)
-
-
-
0.5
45.3
6.3
(104.1)
(52.0)
2.8
45.3
6.3
(104.1)
(41.7)
(91.4)
101.8
(6.3)
25.5
25.6
(42.8)
1,709.5
2,069.9
Co
onsolida
ated cassh flow stateme
ent
Net cash
c
from ope
erating activitie
es
Cash
h flows from investing acttivities
Net cash
c
flows arissing from the acquisition of subsidiaries
Acqu
uisition of asso
ociates and joint ventures
Net acquisition
a
of property, plan
nt and equipme
ent and intang
gible
asse
ets
Net disposal/(acqu
d
uisition) of fina
ancial assets
Non--banking intere
est received
Distrributions receivved from asso
ociates and joint ventures
Note
Six months
ended
30 June
2013
(unaudited)
£m
Six mon
nths
end
ded
30 June
2012
(unauditted)
£m
Year
ended
31 De
ecember
2012
(a
audited)
£m
11
251.7
36
69.6
489.2
(30.8))
(7.8))
(11.3))
-
(23.3)
(3.4)
(
(12.8)
408.9
11.6
3.2
(9
97.4)
5.9
1.0
54.1
12.0
6.5
Net cash
c
from/(us
sed in) investing activities
s
373.8
(9
93.9)
36.5
Cash
h flows from financing acttivities
Proc
ceeds from isssue of non-votiing ordinary shares
Acqu
uisition of own
n shares
Divid
dends paid
Othe
er flows
0.1
(35.6))
(80.4))
(0.6))
1.6
(4
41.3)
(6
69.4)
(0.8)
(
2.8
(41.7)
(104.1)
(1.9)
(116.5))
(10
09.9)
(144.9)
509.0
16
65.8
380.8
Net cash
c
used in financing ac
ctivities
i
in cash and cash
h equivalents
s
Net increase
Open
ning cash and
d cash equivalents
Net increase
i
in ca
ash and cash equivalents
e
Effec
ct of exchange
e rate changess
3,363.3
509.0
45.1
3,01
12.3
16
65.8
(2
21.0)
3,012.3
380.8
(29.8)
Clos
sing cash and
d cash equiva
alents
3,917.4
3,15
57.1
3,363.3
840.3
82
27.8
820.5
2,012.1
1,065.0
1,47
71.9
85
57.4
1,718.7
824.1
3,077.1
2,32
29.3
2,542.8
3,917.4
3,15
57.1
3,363.3
Clos
sing cash and
d cash equiva
alents consis
sts of:
Cash
h backing unit-linked liabilities
Othe
er cash and ca
ash equivalentts held by the Group:
Cash
h
Cash
h equivalents
The cash backin
ng unit-linked
d liabilities ca
annot be use
ed by the Gro
oup as it is no
ot legally enttitled to draw
w on the asse
ets of
the Life
L Compan
ny for its own
n corporate purposes.
p
10
Explanatory notes to the half-year results
Within the notes to the half-year results, all current and comparative data covering periods to (or as at) 30 June are
unaudited. Data given in respect of the comparative year ended (or as at) 31 December 2012 is audited.
1. Basis of preparation
The half-year results are unaudited and do not constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The statutory accounts for 2012, which were prepared in accordance with International
Financial Reporting Standards (IFRS), which comprise Standards and Interpretations approved by either the
International Accounting Standards Board or the IFRS Interpretations Committee or their predecessors, as adopted by
the European Union (EU), and with those parts of the Companies Act 2006 applicable to companies reporting under
IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unqualified
and did not contain a statement made under Section 498 of the Companies Act 2006.
The half-year results have been prepared in accordance with International Accounting Standard (IAS) 34 ‘Interim
Financial Reporting’ and the Disclosure and Transparency Rules of the Financial Conduct Authority.
The Group has considerable financial resources, a broad range of products and a geographically diversified business.
As a consequence, the Directors believe that the Group is well placed to manage its business risks in the context of
the current economic outlook. Accordingly, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. They therefore continue to adopt the going
concern basis in preparing these half-year results.
The presentation of the income statement has been amended to reflect the inclusion of acquisition-related exceptional
items. The policy for exceptional items is set out in note 2. Other than exceptional items, the accounting policies
applied in these half-year results are consistent with those applied in the Group's statutory accounts for 2012. On 1
January 2013, the following Standards and Interpretations were adopted:
IAS 1 (Amended)
IAS 19 (Amended)
IFRS 13
Presentation of Financial Statements
Employee Benefits
Fair Value Measurement
IAS 1 (Amended) had no impact on the Group’s results, but resulted in a change in presentation in the statement of
comprehensive income. IAS 19 (Amended) had no material impact on the Group’s results. IFRS 13 had no impact on
the Group’s results, but resulted in additional disclosures for financial instruments measured at fair value.
The Group did not implement the requirements of any Standards and Interpretations which were in issue and which
were not required to be implemented at the half year. The following Standards and Interpretations in issue had not
been adopted by the Group:
IFRS 9
IFRS 10
IFRS 12
Financial Instruments
Consolidated Financial Statements
Disclosure of Interests in Other Entities
IFRS 9 has yet to be endorsed by the EU.
IFRS 9 replaces the classification and measurement models for financial instruments in IAS 39 with two classification
categories: amortised cost and fair value. Equity instruments will be recorded at fair value, with gains or losses
reported either in the income statement or through equity. However, for fair value assets held through equity there will
no longer be a requirement to transfer gains or losses to the income statement on impairment or disposal.
The expected impact of IFRS 10 is that more funds managed by the Group will be required to be consolidated,
resulting in a grossing up of the Group’s assets and liabilities, but with no net impact on either operating profit, profit
before tax or net assets.
IFRS 12 will have no impact on the Group’s results, but will result in additional disclosures where the Group holds
interests in the funds it manages.
11
2. Exceptional ite
ems
Exce
eptional item
ms are those significant items which a
are required to be separa
ately presentted by virtue of their natu
ure to
enab
ble a better understanding of the Group’s
G
finan
ncial perform
mance. In th
he current pperiod, excep
ptional itemss are
relatted to acquissitions made by the Grou
up, including costs of acq
quisition, cos
sts of integrattion, amortis
sation of acquired
intan
ngible assetss and deferre
ed compensa
ation.
3. Segme
ental rep
porting
The Group has three busin
ness segments: Asset M
Managementt, Private Ba
anking, and Group. Ass
set Managem
ment
princ
cipally comp
prises investm
ment manag
gement inclu
uding advisorry services, equity produucts, fixed in
ncome securrities,
multti-asset, prop
perty and altternative ass
set classes such as com
mmodities, private
p
equityy and funds of hedge fu
unds.
Priva
ate Banking
g principally comprises investment
i
m
management and banking services provided to
o high net worth
w
indiv
viduals and charities. Group
G
princip
pally comprisses the Gro
oup's investm
ment capitall and treasu
ury management
activ
vities, insura
ance arrang
gements an
nd the man
nagement costs
c
associated with governance and corpo
orate
man
nagement. In
nsurance acttivities comp
prise acting a
as insurer to the Group, including the results of th
he captive inssurer
whic
ch provides rreinsurance for
f certain ac
ctivities of th e Group. Pro
ovisions for actual
a
and pootential claim
ms that are within
w
the insurance co
over are con
nsequently recorded
r
in tthe Group segment,
s
nett of any recoognisable ex
xternal insurrance
et. If it is con
ncluded that there is no insurance co
over availablle or the insu
urance coveer will not cov
ver the charg
ge in
asse
full, the actual and estimatted cost in excess of t he insuranc
ce recovery is transferreed to the re
elevant operating
segm
ment. The e
expected insu
urance recov
very may be
e in excess of the amou
unt that is alllowed to be
e recorded under
u
acco
ounting ruless.
Six months
m
ende
ed 30 June 20
013
Fee income
Bank
king interest re
eceivable
Reve
enue
Fee expense
Bank
king interest p
payable
Costt of sales
Net gains
g
on finan
ncial instrumen
nts and other
incom
me
Net revenue
r
Operrating expense
es
Operating profit/((loss)
Net finance
f
income
Sharre of profit/(losss) of associattes and
joint ventures
Proffit before tax and exceptio
onal items
Exce
eptional items:
Acqu
uisition costs
Integ
gration costs
Amo
ortisation of accquired client relationships
r
Defe
erred compenssation arising from
f
acquisitio
ons
Proffit/(loss) before tax
12
Asset
Ma nagement
£m
750.8
750.8
Priv
vate
Bank
king
£m
50.7
5
14.1
64.8
6
Group
£m
-
Total
T
£m
8
801.5
14.1
8
815.6
(178.7)
(178.7)
(3.6)
(7.9)
(1
11.5)
-
(182.3)
(7.9)
(1
190.2)
13.6
0.2
5.9
19.7
585.7
53.5
5
5.9
6
645.1
(376.0)
209.7
(4
42.9)
10.6
1
(7.5)
(1.6)
(4
426.4)
2
218.7
-
-
7.4
7.4
2.4
-
(0.5)
1.9
212.1
10.6
1
(0.3)
(0.3)
211.8
5.3
-
(4.0)
(1.5)
(0.5)
(6.0)
10.6
1
(0.7)
2
228.0
(4.0)
(1.5)
(0.3)
(0.5)
(6.3)
2
221.7
Six months ended 30 June 2012
Fee income
Banking interest receivable
Revenue
Fee expense
Banking interest payable
Cost of sales
Net gains on financial instruments and other
income
Net revenue
Operating expenses
Operating profit/(loss)
Net finance (charge)/income
Share of profit/(loss) of associates
and joint ventures
Profit/(loss) before tax
Year ended 31 December 2012
Fee income
Banking interest receivable
Revenue
Fee expense
Banking interest payable
Cost of sales
Net gains/(losses) on financial instruments and
other income
Net revenue
Operating expenses
Operating profit/(loss)
Net finance income
Share of profit/(loss) of associates and joint
ventures
Profit/(loss) before tax
Asset
Management
£m
631.9
631.9
Private
Banking
£m
49.1
17.6
66.7
Group
£m
0.2
0.2
Total
£m
681.2
17.6
698.8
(151.5)
(151.5)
(3.6)
(10.5)
(14.1)
-
(155.1)
(10.5)
(165.6)
10.6
-
0.2
10.8
491.0
52.6
0.4
544.0
(319.0)
172.0
(42.2)
10.4
(14.4)
(14.0)
(375.6)
168.4
(0.1)
-
6.3
6.2
3.3
-
(0.5)
2.8
175.2
10.4
(8.2)
177.4
Asset
Management
£m
1,295.5
1,295.5
Private
Banking
£m
96.3
33.1
129.4
Group
£m
0.5
0.5
Total
£m
1,392.3
33.1
1,425.4
(303.1)
(303.1)
(7.2)
(19.3)
(26.5)
(0.1)
(0.1)
(310.4)
(19.3)
(329.7)
(8.5)
25.3
39.2
94.4
25.7
1,134.9
(82.6)
11.8
(37.2)
(11.5)
22.4
1,014.8
(671.4)
343.4
11.7
(791.2)
343.7
0.1
-
11.8
5.0
-
(0.5)
4.5
348.5
11.8
(0.3)
360.0
Segment information is presented on the same basis as that provided for internal reporting purposes to the Group's
chief operating decision maker. The chief operating decision maker is the Chief Executive. One of the key measures
used in respect of performance measurement is net revenue.
The allocation of costs to individual business segments is undertaken in order to provide management information on the
business performance and to provide managers with a tool to manage and control expenditure. Costs are allocated on a basis
that aligns the charge with the resources employed in a particular area of the business.
13
4. Revenu
ue
Six months
en
nded
30 June
J
2013
2
£m
707.5
7
11.8
82.2
14.1
815.6
8
S
Six months
ended
30 June
2012
£m
600.6
10.1
70.5
17.6
698.8
Six months
en
nded
30 June
J
2013
2
£m
16.6
1.3
28.3
(0.7)
45.5
S
Six months
ended
30 June
2012
£m
11.5
1.6
28.5
(0.4)
41.2
Year
ended
e
31 Dece
ember
2012
£m
29.6
1.7
54.6
(8.6)
77.3
Origiination and reversal of temp
porary differen
nces
Adjustments in resspect of prior periods
p
ct of changes in corporation
n tax rates
Effec
Tota
al deferred tax
x
2.5
(0.2)
(0.3)
2.0
1.1
(1.8)
(0.2)
(0.9)
(6.5)
4.6
1.4
(0.5)
Tota
al tax charge for the period
d
47.5
40.3
76.8
Six months
nded
en
30 June
J
2013
2
£m
S
Six months
ended
30 June
2012
£m
Year
ended
e
31 Dece
ember
2012
£m
Management feess
Perfo
ormance fees
Othe
er fees
Interrest income re
eceivable by Private Banking
g subsidiaries
Y
Year
en
nded
31 Decem
mber
2
2012
£m
1,22
23.9
2
28.5
13
39.9
3
33.1
1,42
25.4
5. Tax exp
pense
Analysis of tax ccharge reportted in the inc
come statem ent:
UK corporation
c
taxx on profits forr the period
Adjustments in resspect of prior periods
p
eign tax – curre
ent
Fore
Fore
eign tax – adjustments in resspect of prior periods
p
Tota
al current tax
Analysis of tax ccharge/(credit) reported in
n other comp
prehensive in
ncome:
erred tax on acctuarial gains/(losses) on de
efined benefit pension
Defe
sche
emes
1.1
(3.2)
2.6
Defe
erred tax – effe
ect of changess in corporate tax rates
1.0
2.9
1.5
Tax charge/(credit) reported in
n other comp
prehensive in
ncome
2.1
(0.3)
4.1
14
Analysis of tax credit reported in equity:
Six months
ended
30 June
2013
£m
Current income tax on Equity Compensation Plan and other sharebased remuneration
Deferred tax on Equity Compensation Plan and other share-based
remuneration
Deferred tax – effect of changes in corporate tax rates
Tax credit reported in equity
Six months
ended
30 June
2012
£m
Year
ended
31 December
2012
£m
(5.2)
(3.3)
(3.9)
(1.7)
1.7
(3.1)
0.6
(6.3)
0.2
(1.4)
0.7
(6.3)
The tax charge for the period has been arrived at by forecasting an effective annual tax rate for each tax jurisdiction
and applying that rate individually to the pre-tax income of that jurisdiction.
6. Earnings per share
Reconciliation of the figures used in calculating basic and diluted earnings per share:
Six months
ended
30 June
2013
Millions
Six months
ended
30 June
2012
Millions
Year
ended
31 December
2012
Millions
271.1
270.1
270.3
8.4
1.2
7.5
0.5
8.4
0.5
280.7
278.1
279.2
Weighted average number of shares used in calculation of basic
earnings per share
Effect of dilutive potential shares – share options
Effect of dilutive potential shares – contingently issuable shares
Weighted average number of shares used in calculation of
diluted earnings per share
Material transactions involving shares or potential shares since the reporting date and before the completion of these
half-year results are included in note 9.
7. Dividends
Six months
ended 30 June 2013
Declared and paid in period:
Final dividend
Interim dividend
Interim dividend for 2013
15
Six months
ended 30 June 2012
Year ended
31 December 2012
£m
Pence per share
£m
Pence per share
£m
Pence per share
80.4
30.0
80.4
43.1
30.0
16.0
69.4
69.4
26.0
26.0
69.4
34.7
104.1
26.0
13.0
39.0
8. Financiial asse
ets and financia
f
al liabilitiies
The Group hold
ds financial assets and
d financial li abilities thatt are measu
ured at fair value subs
sequent to initial
i
reco
ognition. Eacch instrumentt has been categorised
c
w
within one off three levels
s using a fairr value hiera
archy that refflects
the significance
s
of the inputss used in ma
aking the me
easurements
s. These leve
els are basedd on the deg
gree to which
h the
fair value
v
is obse
ervable and are
a defined as
a follows:
–
Level 1 fair vvalue measu
urements are
e those derivved from quo
oted prices (u
unadjusted) iin active marrkets for iden
ntical
assets
a
or liab
bilities and principally
p
comprise invesstments in qu
uoted equitie
es, daily priceed funds, giltts and excha
angetraded
t
deriva
atives;
–
Level 2 fair vvalue measu
urements are
e those derivved from inp
puts other than quoted pprices include
ed within Levvel 1
that
t
are obsservable for the asset orr liability, eitther directly (i.e. as price
es) or indireectly (i.e. derrived from prices
using
u
simple
e models an
nd extrapolation method s) and princ
cipally comp
prise corporaate bonds, fo
oreign excha
ange
contracts
c
and loans and receivables held at fair vvalue; and
–
Level 3 fair vvalue measu
urements are
e those derivved from valuation techn
niques that innclude inputs
s for the assset or
liability
l
that a
are not base
ed on observ
vable markett data and principally
p
comprise invesstments in private equityy and
hedge
h
fundss. These fund
ds are mana
aged by third parties and are measured at the vallues provided by the rele
evant
fund
f
manage
ers.
The Group's fina
ancial assetss and financia
al liabilities a
are analysed as follows:
30 June 2013
Fina
ancial assets::
Equities
Debtt securities
Deriv
vative contraccts
Loan
ns and receiva
ables
Othe
er instruments
Asse
ets backing u
unit-linked lia
abilities
Fina
ancial liabilitie
es:
Deriv
vative contraccts
Othe
er financial liab
bilities held at fair value
throu
ugh profit or lo
oss
Custtomer accountts
Depo
osits by bankss
Unit-linked liabilities
ets
F inancial asse
nd liabilities not
n
an
at fair value
Level 3
£m
£
£m
L
Level 1
£m
Level
L
2
£m
Total
£m
167.7
276.1
2.5
446.3
30.3
53.4
29.2
32.3
145.2
45.7
2.8
48.5
296
6.5
684
4.6
981
1.1
243.7
626.0
34.5
684.6
32.3
1,621.1
8
8,921.4
342.2
180.9
175
5.5
9,620.0
2.5
32.5
-
-
35.0
15.9
16.3
3.6
-
35.8
18.4
48.8
3.6
2,624
4.1
37
7.2
2,661
1.3
2,624.1
37.2
2,732.1
10
0,141.1
138.6
-
180
0.6
10,460.3
The fair value off financial asssets and liab
bilities not at fair value is not materially different too the carrying
g value.
With
hin financial a
assets, £25.6
6 million was
s transferred from level 2 to level 1 du
uring the perriod. Within assets
a
backin
ng
unit--linked liabilitties, £77.3 million
m
was tra
ansferred fro
om level 1 to level 2 and £162.6
£
millioon was transfferred from le
evel
e primarily to
2 to level 1. The transfers fro
om level 1 to level 2 relate
o a change in
n methodologgy whereby fixed
f
income
e
secu
urities are no
ow allocated to level 2 ba
ased on a rea
assessment of valuation information. The transferrs from level 2 to
leve
el 1 relate prim
marily to equ
uities that have returned tto daily price
ed positions.
16
Financial assets:
Equities
Debt securities
Derivative contracts
Loans and receivables
Other instruments
Assets backing unit-linked liabilities
Financial liabilities:
Derivative contracts
Other financial liabilities held at fair value through
profit or loss
Customer accounts
Deposits by banks
Unit-linked liabilities
31 December 2012
Financial assets
and liabilities not
Level 3
at fair value
£m
£m
Level 1
£m
Level 2
£m
Total
£m
272.8
390.3
0.5
663.6
27.8
193.2
26.7
33.0
280.7
56.6
2.8
59.4
117.7
898.4
1,016.1
357.2
701.2
30.0
898.4
33.0
2,019.8
8,038.0
274.7
170.7
42.4
8,525.8
1.0
25.7
-
-
26.7
16.6
29.8
-
-
46.4
17.6
55.5
-
2,485.9
26.1
2,512.0
2,485.9
26.1
2,585.1
9,326.0
16.3
-
4.0
9,346.3
Movements in financial assets and liabilities categorised as level 3 during the period were:
At 1 January
Exchange translation adjustments
Total unrealised gains/(losses) recognised in the
income statement
Total unrealised gains recognised in other
comprehensive income
Additions
Disposals
Transfers in
Transfers out
At 30 June/31 December
30 June 2013
Assets
backing
Financial unit-linked
liabilities
assets
£m
£m
59.4
170.7
(0.6)
-
Financial
liabilities
£m
-
Financial
assets
£m
166.7
(2.6)
Assets
backing
unit-linked
liabilities
£m
83.1
6.8
1.5
3.6
-
(4.8)
1.8
-
-
5.0
2.8
(17.0)
0.6
48.5
Transfers are assumed to have occurred at the beginning of the period.
17
31 December 2012
0.3
(2.9)
9.2
180.9
122.1
3.6
-
17.9
(122.6)
(0.2)
(41.3)
-
3.6
59.4
170.7
9. Share ccapital and
a sha
are prem
mium
At 1 January 2013
3
Sha
ares issued
Sha
ares cancelled
At 30
3 June 2013
Number
N
of shares
Millions
M
282.5
282.5
Ordinary
es
share
£m
£
226
6.0
226
6.0
n-voting
Non
ordinary
o
shares
£m
56.5
56.5
Total sharres
£m
£
282
2.5
282
2.5
Share
emium
pre
£m
90.1
0.1
90.2
At 1 January 201
12
Sha
ares issued
Sha
ares cancelled
d
At 30 June 2012
2
Number
N
off shares
Millions
282.5
0.2
(0.2)
282.5
Ordina
ary
share
es
£m
£
226
6.0
226
6.0
Non-voting
ordinary
shares
£m
56.5
0.2
(0.2)
56.5
Total sharres
£m
£
282
2.5
0.2
0
(0
0.2)
282
2.5
Share
prremium
£m
87.8
1.4
89.2
At 1 January 201
12
Sha
ares issued
Sha
ares cancelled
d
At 31 Decemberr 2012
Number
N
off shares
Millions
282.5
0.5
(0.5)
282.5
Ordina
ary
share
es
£m
£
226
6.0
226
6.0
Non-voting
ordinary
shares
£m
56.5
0.5
(0.5)
56.5
Total sharres
£m
£
282
2.5
0.5
0
(0
0.5)
282
2.5
Share
prremium
£m
87.8
2.3
90.1
On 5 July 2013, 1
1.7 million non
n-voting ordinary shares we
ere issued in respect of the
e acquisition oof Cazenove Capital Holdings
Limitted (see note
e 14). Shares held in treasu
ury are include
ed in own sha
ares.
10
0. Own sshares
Own
n shares include the Group's shares (both ordina ry and non-v
voting ordina
ary) that are hheld by emp
ployee trusts or in
treas
sury.
Mov
vements during the period
d were as follows:
At 1 January
Own
n shares purch
hased
Can
ncellation of ow
wn shares held in treasury*
Awa
ards vested*
At 30
3 June/31 De
ecember
Six months
ended
30
3 June
2013
£m
(165.1)
(35.6)
24.0
(176.7)
Six months
s
ended
d
30 June
e
2012
2
£m
m
(172.5
5)
(41.3
3)
2.7
7
42.2
2
(168.9
9)
Year
ended
31 Deccember
2012
£m
(172.5)
(41.7)
5.6
43.5
(165.1)
* Ow
wn shares balan
nces are transfe
erred to the pro
ofit and loss resserve insofar as
s they relate to treasury sharess that have bee
en cancelled orr
share
e-based payme
ents that have vested.
v
18
11. Reconciliation of net cash from operating activities
Operating profit
Adjustments for income statement non-cash movements:
Depreciation of property, plant and equipment and amortisation of
intangible assets
Net (gains)/losses and impairments taken through the income statement
on financial instruments
Share-based payments
Net (release of)/charge for provisions
Other non-cash movements
Six months
ended
30 June
2013
£m
212.4
Six months
ended
30 June
2012
£m
168.4
Year
ended
31 December
2012
£m
343.7
6.6
6.3
12.0
(17.3)
0.8
(22.0)
24.2
21.4
45.3
(0.7)
1.9
17.2
8.2
7.7
4.0
21.0
38.1
56.5
(178.9)
35.4
82.5
224.7
19.6
(58.5)
45.8
55.0
24.0
Adjustments for statement of financial position movements:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables and provisions
Adjustments for Life Company movements:
Net purchase of assets backing unit-linked liabilities
Net increase in unit-linked liabilities
Tax paid
Interest paid
Net cash from operating activities
19
(1,094.2)
(394.3)
(554.2)
1,114.0
548.5
701.1
19.8
154.2
146.9
(47.3)
(45.9)
(81.6)
(0.2)
(0.3)
251.7
369.6
489.2
12
2. Retire
ement benefit obligatio
o
ons
The amounts reccognised in the
t consolida
ated stateme
ent of financia
al position arre:
Six months
ended
30
3 June
2013
£m
Six months
s
ended
d
30 June
e
2012
2
£m
m
Year
ended
31 Deccember
2012
£m
776.9
763.8
8
763.8
Inte
erest on assetts
17.5
16.1
1
33.3
Rem
measurementt of assets
26.0
(11.9
9)
(1.9)
Ben
nefits paid
(12.4)
(10.7
7)
(18.3)
Fair value of pla
an assets
808.0
757.3
3
776.9
At 1 January
(709.7)
(708.1
1)
(708.1)
Inte
erest cost
(16.0)
(15.9
9)
(32.1)
At 1 January
Acttuarial gains due to change in demograph
hic assumption
ns
-
-
9.0
(20.7)
(0.1
1)
4.7
Acttuarial losses d
due to experie
ence
(0.4)
(0.9
9)
(1.5)
Ben
nefits paid
12.4
10.7
7
18.3
ptions
Acttuarial (losses)/gains due to
o change in financial assump
Pre
esent value o
of funded obliigations
spect of the UK
U defined be
enefit Scheme
e
Nett asset in res
Nett liabilities in respect of otther defined benefit schem
mes
(734.4)
(714.3
3)
(709.7)
73.6
43.0
0
67.2
7.0
8.1
1
7.8
.
The principal fina
ancial assum
mptions used
d for the UK d
defined bene
efit Scheme were
w
as folloows:
Six months
m
ended
30
3 June
2013
%
4.7
Six months
s
ended
d
30 June
e
2012
2
%
4.4
4
Year
ended
e
31 Dece
ember
2012
%
4.6
RPI inflation rate
3.7
3.2
2
3.3
CPI inflation rate
2.9
2.4
4
2.7
ure pension in
ncreases
Futu
(for benefits earne
ed before 13 August
A
2007)
Futu
ure pension in
ncreases
(for benefits earne
ed after 13 Au
ugust 2007)
3.5
3.1
3.2
2.3
2.1
2.2
Disc
count rate
20
13. Acquisitions
On 2 April 2013, the Group acquired 100 per cent. of the net assets of STW Fixed Income Management LLC (‘STW’),
a fixed income fund manager based in the United States of America, for consideration of £34.7 million. The
acquisition increases Schroders' assets under management by 3 per cent., broadens our product and service platform
in fixed income and extends our institutional client base in the United States of America.
The carrying value of the net assets acquired in the transaction, together with the goodwill and intangible assets
arising, are as follows:
Fair values
on acquisition
£m
Net assets acquired:
Non-current financial assets
0.1
Cash
0.3
Trade and other receivables
3.6
Trade and other payables
(0.8)
Goodwill
3.2
19.8
Intangible assets
11.7
34.7
Satisfied by:
Cash
Contingent consideration liability*
Total consideration
31.1
3.6
34.7
* At the acquisition date, £3.6 million was recognised as contingent consideration. Payment of this amount is contingent upon the
attainment of certain levels of revenue in the two years subsequent to the acquisition date. The amount accrued is the maximum
that is payable under the purchase agreement. An estimate of the range of outcomes is that a payment of between £nil and £3.6
million will become payable at the end of the measurement period.
The goodwill arising on the acquisition is attributable to the anticipated profitability of the business acquired and
synergies arising from merging the business of STW with that of the Group. The intangible assets represent the value
attributed to existing contractual arrangements between STW and the funds it manages. The full amount of goodwill is
expected to be deductible for tax purposes.
Costs of acquisition, recorded within 'Operating expenses' in the income statement, were £1.7 million, of which £1.5
million was recorded in 2012. The result contributed by the acquisition in the period between the date of acquisition
and the reporting date was a profit of £1.1 million before tax; further amortisation, integration and reorganisation costs
of £1.6 million were incurred in the period. Revenue in the same period was £3.8 million.
If the acquisition had been completed on 1 January 2013, an aggregation of the Group's revenue for the period and
those of the acquiree would have been £819.4 million, and the profit before tax for the period on the same basis would
have been £222.4 million. These figures include a deduction for the additional amortisation charge of £0.3 million that
would have arisen had the acquisition taken place at that date.
21
14
4. Eventts after the
t repo
orting pe
eriod
On 2 July 2013, the Group acquired 100 per cent. of the issued share capital of Cazennove Capital Holdings Lim
mited
(‘Caz
zenove Capittal’), an invesstment and wealth
w
manage
ement compa
any registered
d in Jersey. D
Due to the sh
hort period off time
betw
ween the acquisition date and the date
e of these fina
ancial statem
ments, all num
mbers discloseed below are
e considered to
t be
prov
visional.
The total conside
eration payab
ble was £385 million, of w
which £129 million was setttled in cash aand £217 million in loan notes
n
(sub
bject to the fiinalisation of their fair va
alue); the rem
maining £39 million relate
ed to pre-acqquisition sharre-based payyment
oblig
gations that w
will be settled in shares. Th
he fair value o
of net tangible
e assets acqu
uired is approx
oximately £89 million, princcipally
comprising cash, trade and oth
her receivable
es and trade a
and other pay
yables. Details of these am
mounts are no
ot yet final. Th
he fair
value
e assigned to
o goodwill and
d intangible assets
a
on the
e acquisition is
s provisionally
y determinedd to approximately £296 million.
m
Full statutory discclosure of the acquisition will
w be given in the Group's Annual
A
Report and Accounnts.
The acquisition w
was made by means
m
of a sc
cheme of arra
angement und
der article 125
5 of the Comppanies (Jerse
ey) Law 1991. The
reco
ommended accquisition wass announced on
o 25 March 2013, and wa
as completed on 2 July 20113.
The acquisition m
materially expa
ands the Group’s scale an
nd capabilities
s for private cllients and chaarities with the
e formation of
o one
of th
he leading Privvate Banking businesses in
i the UK. Scchroders will have a compelling servicee proposition for
f private ban
nking
ning, deposit--taking and le
clien
nts covering in
nvestment ma
anagement, financial
f
plann
ending servicees. After addiing £13.2 billion of
asse
ets under man
nagement co
ontributed by the
t acquisition, combined pro forma as
ssets under m
management in
i Private Ban
nking
at 30
0 June 2013 w
were £30.1 biillion.
The acquisition a
also adds £6.9 billion of as
ssets under m
management to Asset Management annd brings add
ditional investtment
talen
nt in complem
mentary strategies across UK
U and Europ
pean equities, multi-manager and fixed i ncome.
The goodwill reco
ognised represents the valu
ue of the acqu
uired busines
ss arising from
m:
• A high
h quality cliient base;
• Tallented manag
gement and employees;
e
• Op
pportunities for synergies frrom combining
g operations a
and Asset Ma
anagement distribution; annd
• A broader
b
platfo
orm for busine
ess growth.
Costs of acquisition, recorded within ‘O
Operating ex penses’ in the
t
income statement,
s
w
were £3.8 million
m
to 30 June
2013
3.
22
Additional information
Assets under management
Six months to 30 June 2013
31 December 2012
Institutional
£bn
Intermediary Private Banking
£bn
£bn
Total
£bn
123.7
72.0
16.3
Net flows
2.1
2.7
(0.3)
Acquisition of STW
7.1
-
-
7.1
Investment returns
6.7
4.5
0.9
12.1
139.6
79.2
16.9
235.7
Intermediary Private Banking
£bn
£bn
Total
£bn
30 June 2013
Three months to 30 June 2013
31 March 2013
Net flows
Institutional
£bn
136.8
(0.2)
Acquisition of STW
7.1
Investment returns
(4.1)
30 June 2013
82.4
17.3
(0.8)
(0.1)
-
139.6
-
(2.4)
(0.3)
79.2
16.9
212.0
4.5
236.5
(1.1)
7.1
(6.8)
235.7
Income and cost metrics for the Group (excluding exceptional items)
Six months
ended
30 June
2013
Six months
ended
30 June
2012
Year
ended
31 December
2012
Costs: net revenue ratio
66%
69%
70%
Compensation costs: operating revenue ratio
48%
47%
49%
Bonus: pre-bonus operating profit
40%
38%
42%
Return on average capital (pre-tax)
21%
18%
18%
Return on average capital (post-tax)
17%
14%
14%
23
Ke
ey risks
Like
e any other a
asset manag
gement and private
p
bankking business
s, we are exposed to a rrange of risk
ks. These risks, if
not managed properly, incre
ease the possibility of the
e Group not being able to meet its obbjectives. So
ome of them, like
the risks
r
inheren
nt in taking acctive investm
ment decision
ns on behalf of clients, arre the risks w
we are in bus
siness to take
e.
The key risks to which the Group
G
will be exposed in tthe second half
h of 2013 are
a expectedd to be substtantially the same
s
as th
hose describ
bed in the 20
012 Annual Report,
R
and
d include market, investm
ment perform
mance and liq
quidity risk, credit
c
risk, operational risk and acq
quisition integ
gration risk.
Dirrectors’ respon
nsibility stateme
s
ent
On behalf
b
of the Directors, I confirm to th
he best of myy knowledge that the half-year resultss:
–
Have been p
prepared in accordance
a
with
w Internati onal Accoun
nting Standarrd 34 as ado pted by the European
E
Un
nion;
–
Include a fair review of the informattion required
d by Disclosure and Transparency R
Rule 4.2.7, namely
n
impo
ortant
events
e
that have occurrred during th
he first six m
months of th
he financial period
p
and ttheir impact on the half--year
results,
r
as w
well as a desscription of th
he principal risks and un
ncertainties faced by the Group and the undertakkings
included
i
in th
he consolida
ation taken as
s a whole forr the remainiing six month
hs of the finaancial year; and
a
–
Include, as required byy Disclosure
e and Tran sparency Rule
R
4.2.8, a fair review
w of material related party
p
transactions
t
that have ta
aken place in
n the first sixx months of the financial period and any materia
al changes to
o the
related
r
partyy transactionss described in
i the last An
nnual Reportt.
A lis
st of current D
Directors is maintained
m
on the Schrod
ders plc website: www.sc
chroders.com
m
On behalf
b
of the Board
Rich
hard Keers
Chie
ef Financial O
Officer
7 Au
ugust 2013
24
Independent review report to Schroders plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements on pages 4 to 22 of the
half-year results for the six months ended 30 June 2013, which comprises the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated cash flow statement and related notes. We have read the other
information contained in the half-year results and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of financial statements.
Directors’ responsibilities
The half-year results are the responsibility of, and have been approved by, the Directors. The Directors are
responsible for preparing the half-year results in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial statements included in these half-year results has
been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by
the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the halfyear results based on our review. This report, including the conclusion, has been prepared for and only for the
Company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no
other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410,
‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with International
Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-year results for the six months ended 30 June 2013 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
7 August 2013
London
25
Notes:
a) The
T mainten
nance and integrity of the
e Schroders plc website is the responsibility of thhe Directors; the work ca
arried
out
o by the a
auditors doe
es not involv
ve considera
ation of thes
se matters and,
a
accordinngly, the auditors accep
pt no
responsibility
r
y for any ch
hanges thatt may have occurred to
o the financ
cial statemennts since th
hey were iniitially
presented
p
on
n the website
e.
b) Legislation in
n the United Kingdom go
overning the preparation and dissem
mination of finnancial statements may differ
d
from
f
legislation in other jurisdictions.
26