Schroders 2013 Annual Results
Transcript of Schroders 2013 Annual Results
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Net revenue £1,658.5m (2014: £1,549.5m)
Profit before tax and exceptional items £609.7m (2014: £565.2m)
Profit before tax £589.0m (2014: £517.1m)
Full year dividend up 12% to 87.0 pence per share (2014: 78.0 pence per share)
72% of assets under management outperforming over three years
Net new business £13.0bn (2014: £24.8bn)
Assets under management £313.5bn (2014: £300.0bn)
Board and senior management succession
2015: overview Strong results in a challenging market
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£32.0bn of new mandates
Net inflows £8.8bn
Strong performance in Asia Pacific, UK
Year of transition in US
Significant new business in Fixed Income and Multi-asset
Institutional Assets under management: £181.0bn (2014: £171.1bn)
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Strong flows in H1, challenging markets in H2
Net inflows £4.3bn
Significant flows in Asia Pacific, continental Europe
Diversified across Fixed Income, Multi-asset, Equities
Active management of product range:
47 fund launches
40 fund closures
Intermediary Assets under management: £100.9bn (2014: £97.8bn)
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£1.7bn of net inflows in core equities
Strong flows in Japanese and European equities
Small inflows in Emerging Markets
Outflows in UK equities
£2.5bn of outflows in £20.4bn Quant business
Equities Assets under management: £129.9bn (2014: £129.6bn)
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Multi-asset Assets under management: £78.1bn (2014: £72.0bn)
Net new business £6.2bn
Diversified across Risk Mitigation
Risk Controlled Growth
Income
Inflation Protection
New initiatives in liquid alternatives
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Net new business £9.1bn
Major flows in US/European Bond Beta
Global Multi-Sector
UK and European Credit
EMD Relative Return
Asian Bonds
New fund launches
Infrastructure Debt capability
Exploring initiatives in ABS/MBS, loans
Fixed Income Assets under management: £60.3bn (2014: £51.1bn)
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Net revenues £207.2m (2014: £213.5m)
2014 included £9.0m of one off revenues
Profit before tax and exceptional items £61.3m (2014: £61.7m)
70% cost income ratio
Net inflows in UK £0.2bn
slowdown in H2
private clients and charities drawing down on investment returns
Outflows in Switzerland
reshaping business
Growth opportunities in UK, overseas
Wealth Management Assets under management: £31.6bn (2014: £31.1bn)
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Strategy of building businesses with high quality partners
To enter new markets
China: Bank of Communications Schroders
India: Axis Asset Management Company
To complement existing presence
Japan: Nippon Life
To extend investment capabilities
Insurance linked securities: Secquaero
Convertibles
Loans
As investment opportunity
RWC
Nutmeg
Associates, joint ventures and partnerships Good progress in 2015
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43 58 78 87 0
102030405060708090
2012 2013 2014 2015
104.7 149.9 166.8 176.9 101.3 144.6 161.5 172.2 0
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2012 2013 2014 2015
Basic Diluted
360.0 447.5 517.1 589.0
60.3 48.1
20.7
360.0
507.8 565.2
609.7
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200
300
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2012 2013 2014 2015
1,122.7 1,346.9 1,512.4 1,622.2
28.5
80.6 37.1
36.3
1,151.2
1,427.5 1,549.5
1,658.5
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1,200
1,400
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2012 2013 2014 2015
Profit before tax (£m) Net revenue, including performance fees (£m)
Financial highlights
Basic and diluted earnings per share before exceptional items
(pence)
Dividend per share (pence)
Exceptional items
Performance fees
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Net revenue – driven by organic growth Net revenue up 7% to £1,659m
£m
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Group segment 11
Group segment 28
Group segment 39
Asset Management
1,304
Asset Management
1,308
Asset Management
1,413
Wealth Management
213
Wealth Management
214
Wealth Management
207
Net revenue (old basis)
1,528
Associates and JVs
11
Net finance income 11
Net revenue (new basis)
1,550
Net new business 68
Markets and FX 38
Associates and JVs
11
Other (8)
Net revenue (new basis)
1,659
2014 2014 2015
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Institutional Intermediary Performance fees
Asset Management net operating revenues Asset Management net operating revenue margins, excluding performance fees, at 49 bps
£m
2013 2014 2015
550.9 571.7 628.7
687.8 716.4 764.7
35.1
45.1
27.8
6.4
26.2
9.5
586.0
732.9
599.5
722.8
654.9
774.2
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Institutional Intermediary Performance fees
550.9571.7628.7687.8716.4764.735.145.127.86.426.29.5586.0732.9599.5722.8654.9774.20100200300400500600700800InstitutionalIntermediaryPerformance fees
515.8
35.1
550.9 27.8
543.9
571.7
642.7
687.8
45.1 6.4
710.0
716.4 9.5
755.2
764.7
26.2
602.5
628.7
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109.7
154.8 155.2
25.9
34.5 36.0
13.6
14.6 15.5
0.4
2.9 0.6
149.6
206.8 207.3
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2013 2014 2015
Management fees Transaction fees Net banking interest income Performance fees
Wealth Management net operating revenues Wealth Management net operating revenue margins, excluding performance fees, at 65 bps
£m
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Operating expenses Cost control in line with projections
£m 2014
2015
2015 versus 2014
AM
& Group WM Total
Compensation costs 687.8 637.2 96.8 734.0 +7%
Non-compensation costs 296.5 265.7 49.1 314.8 +6%
Operating expenses (excluding
exceptional items) 984.3 902.9 145.9 1,048.8 +7%
Exceptional expenses 48.8 17.7 0.8 18.5 -62%
Operating expenses (including
exceptional items) 1,033.1 920.6 146.7 1,067.3 +3%
Headcount 3,556 3,158 626 3,784 +6%
2014 2015
Compensation cost:net revenue ratio 44% 44%
Cost:net revenue ratio 64% 63%
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Profit before tax and exceptional items Up 8% to £609.7m reflecting strong business performance
£m
Group segment 4.2
Group segment 7.9
Profit after tax and exceptional items
467.4
Asset Management
499.3
Asset Management
540.5
Wealth Management
61.7
Wealth Management
61.3
Profit before tax and exceptional
items 565.2
Net revenue 109.0
Compensation costs (46.2)
Other costs (18.3)
Profit before tax and exceptional
items 609.7
Tax (126.3)
Profit after tax and before exceptional items
483.4
2014 2015 2015
Exceptional items
(16.0)
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Analysis of Group Capital Increase of £258m during 2015 to £2,796m
** Includes RWC Partners Limited and Schroder Ventures Investments Limited associates
£m
2014
2015
Regulatory capital 673 653
Other operating capital 284 253
Investment capital* 725 942
Seed capital 163 229
Other items** 693 719
Statutory Group capital 2,538 2,796
** Comprises goodwill, intangible assets, pension scheme surpluses, other associates and joint ventures and deferred tax
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Good new business flows in Institutional
Market volatility reducing retail investor demand
Many long-term growth opportunities
Continuity and stability through succession plans
Outlook Resilience through a globally diversified business
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Forward-looking statement
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’, ‘sees’, ‘believes’, ‘expects’, ‘confident’, ‘aims’, ‘will have’, ‘will be’, ‘will
ensure’, ‘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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