Schroders
2011 Half-Year Results
trusted heritage
advanced thinking
Michael Dobson
Chief Executive
4 August 2011
H1 2011: Summary
1
•
Focus on investment performance
– 77% of funds outperforming over 3 years
•
Broad product range
Proven Distribution capability
– Net new business £5.1bn (H1 2010: £16.1bn)
– Assets under management £204.8bn (31 Dec 2010:
£196.7bn)
•
Global franchise
– 73% of new business outside UK
•
Investment in organic growth
– Added 96 people across Investment, Distribution, Private
Banking, Infrastructure
•
Strong financials
– Profit before tax £215.7m (H1 2010: £188.2m)
– Earnings per share 60.7p (H1 2010: 49.4p)
– Interim dividend 13.0p per share (interim dividend 2010:
11.0p)
H1 2011: Gross sales
£bn
50
41.2
40
36.7
34.2
30
33.1
26.0
19.9
20
15.6
10
0
H1 2008
H2 2008
Equities
2
H1 2009
Fixed Income
H2 2009
H1 2010
Multi-Asset
H2 2010
Alternatives
H1 2011
Private Banking
H1 2011: Net inflows
£bn
20
16.1
15
13.3
11.0
10
5.1
5
-1.1
1.7
-8.5
0
-5
-10
H1 2008
Equities
3
H2 2008
H1 2009
Fixed Income
H2 2009
Multi-Asset
H1 2010
H2 2010
Alternatives
H1 2011
Private Banking
Regional diversification: gross sales
73% of gross sales outside UK
Continental
Europe
£12.7bn
Asia Pacific
£8.1bn
UK
£8.8bn
North
America
£2.0bn
4
South
America
£0.6bn
Middle
East
£0.9bn
Regional diversification: assets under management
67% of revenues outside UK
UK
£72.2bn
Continental
Europe
£47.1bn
North
America
£22.0bn
5
South
America
£6.2bn
Middle
East
£5.2bn
Asia Pacific
£52.1bn
Institutional
Assets under management: £112.7bn (31 Dec 2010: £106.4bn)
£bn
•
Strong results in UK and Europe
20
16.3
•
All regions positive
15.1
15
13.1
12.1
•
Good pipeline of unfunded wins
•
Institutional revenues doubled in 2
years
9.8
10
7.0
6.4
5.7
4.6
5
0
-0.8
-5
-7.2
-6.4
-6.5
-10
H1 2009
H2 2009
Gross inflows
6
H1 2010
Gross outflows
-8.1
-8.5
H2 2010
H1 2011
Net flows
Intermediary
Assets under management: £75.4bn (31 Dec 2010: £74.1bn)
£bn
•
Gross sales close to H2 2010 level
•
Net result impacted by move away
from risk assets in Europe
25
21.1
18.4
20
18.2
17.7
15
10.7
•
•
Closure of funds for capacity
reasons
Well positioned for recovery in
demand
10
7.2
5.1
5
2.9
2.5
0.4
0
-5
-10
-8.2
-11.2
-15
-16.0
-15.3
H1 2010
H2 2010
-17.3
-20
H1 2009
H2 2009
Gross inflows
7
Gross outflows
H1 2011
Net flows
Private Banking
Assets under management: £16.7bn (31 Dec 2010: £16.2bn)
•
Successful transition of new clients won in 2010
•
Management fee revenues up 25 per cent
•
Net new business in 2011 impacted by market uncertainty
•
No provisions for doubtful debts
•
Profit up 86 per cent
8
Schroders
2011 Half-Year Results
Kevin Parry
Chief Financial Officer
4 August 2011
Key figures
Profit before tax (£m)
Total costs: net revenue ratio (%)
215.7
188.2
173.3*
81*
69*
68
76.9*
H1 2008
H1 2009
H1 2010
Earnings per share (pence)
H1 2011
H1 2008
60.7
H1 2009
H1 2010
H1 2011
Dividend per share (pence)
13
49.4
46.5*
65
10
10
H1 2008
H1 2009
11
20.3*
H1 2008
H1 2009
H1 2010
H1 2011
* Before exceptional items of 2009: £40.6m; 2008: £37.6m relating to cost reductions and losses on financial assets.
10
H1 2010
H1 2011
Profit before tax
Revenue growth flows through to the bottom line
£m
Net
Revenue
£56m
PBT
H1 2010
£188m
11
£216m
Significant increase in net revenue
£m
Performance Fees
£17m
Group Revenue
Markets and FX
£9m
£36m
Net New Business
£46m
Net
Revenue
H1 2010
£537m
12
Net
Revenue
H1 2011
£593m
Profit before tax
Revenue growth flows through to the bottom line
£m
Compensation
Costs
£15m
Other Costs
£9m
Net Finance
Income
£4m
Associates
Joint
Ventures
and Associates
£8m
Net Revenue
£56m
PBT
H1 2010
£188m
13
PBT
H1 2011
£216m
Institutional net revenues
£m
14
Breakdown of £39m net revenue increase on
H1-10 (excluding performance fees)
Intermediary net revenues
£m
Breakdown of £36m net revenue increase on
H1-10 (excluding performance fees)
309
1
291
6
272
308
285
272
H1 2010
Intermediary
15
H2 2010
H1 2011
Performance fees
Institutional and Intermediary net revenues
£m
64bps
63bps
58bps
60bps
H1 2010
Management Fees – Institutional
16
Management Fees – Intermediary
Performance Fees
58bps
57bps
H2 2010
H1 2011
Asset Management Combined
Private Banking segment
£m – Net Revenue
£m – Costs
58.0
53.4
49.9
7.2
45.7
7.6
7.6
49.9
43.3
12.7
11.6
16.4
18.3
13.8
11.8
2.8
4.7
30.5
H1 2010
34.2
30.7
24.8
H2 2010
Management fees
Net banking interest income
17
38.1
H1 2011
Transaction fees
H1 2010
Compensation costs
Other costs
H2 2010
27.4
H12011
Doubtful debt provision
Operating expenses
£m
H1
2010
H2
2010
H1
2011
Staff costs
242.4
263.1
257.8
Other costs
111.0
140.0
123.4 (16.6)
10.3
7.2
363.7
410.3
Depreciation and
amortisation
Total
18
H1
2011
VS H2
2010
(5.3)
•
Lower legal and regulatory costs following
increase in H2 2010
-
•
Absence of loan provisions in Private Bank
388.4 (21.9)
•
Effective procurement
•
Small increase in other costs
7.2
Compensation cost:
operating revenue ratio
46%
44%
44%
(2%)
Total cost: total net revenue
ratio
68%
66%
65%
(1%)
Tax charge and earnings per share
Benefit of higher profitability
£m
19
H1 2010
H1 2011
% Change
Profit before tax
188.2
215.7
14.6
Tax
(47.5)
(50.0)
5.3
Effective tax rate(%)
25%
23%
-
Profit after tax
140.7
165.7
18
Basic earnings per share
49.4p
60.7p
23
Dividend
11.0p
13.0p
18
Movement in Group Capital
PAT
£166m
Group
Capital
H2 2010
FX
£15m
Pensions
and Other
£7m
Share
Awards
£31m
Share
Purchases
£101m
Dividends
£73m
Group
Capital
H1 2011
£1,845m
£1,800m
20
Group capital allocation
Investment capital breakdown (%)
£m
H1
2010
H2
2010
H1
2011
4%
12%
Asset Management
& Private Banking
operational capital
736
Investment capital*
721
774
807
Other (intangibles
etc.)
141
162
188
Statutory Group
capital
1,598
1,800
1,845
864
30%
850
9%
10%
7%
3%
Cash and cash equivalents
Long fixed income
Long only EMD absolute return
Legacy private equity
* Not included in AUM
21
25%
Seed capital: alpha exposures
Long global macro
Long only multi-asset absolute return
Other
Outlook
Michael Dobson
Chief Executive
Outlook
• Market concerns holding back Intermediary and Private Banking demand
• Opportunities in Institutional
• Continued investment in talent and infrastructure
23
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Forward-Looking Statements
These presentation slides may contain forward-looking statements with respect to the
financial condition and results of the operations and businesses of Schroders plc.
These statements and forecasts involve risk and uncertainty because they relate to events
and depend upon circumstances that may occur in the future.
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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