Peter Harrison Group Chief Executive
Presentation
5 March 2020
Annual results 2019
1
Peter HarrisonGroup Chief Executive
Delivering strategic progress
Targeted acquisitions to further reposition business
Progress across strategic initiatives
Greater granularity in reporting
Record inflows across both Asset and Wealth Management
2
Peter HarrisonGroup Chief Executive
1 Before exceptional items.
Targeted acquisitions to further reposition business
Progress across strategic initiatives
Greater granularity in reporting
Record inflows across both Asset and Wealth Management
2019 2018 Change
Net income1 £2,124.8m £2,123.9m 0%
Ratio of total costs to net income 67% 64% –
Profit before tax1 £701.2m £761.2m (8)%
AUM £500.2bn £407.2bn 23%
Net new business £43.4bn £(9.5)bn –Basic EPS1 201.6p 215.8p (7)%Total dividend per share 114p 114p –
3
1 Before exceptional items.
Grow Asset Management
Closer relationships with end clients
Expand Private Assets & Alternatives
4
Wealth Management
Private Assets & Alternatives
Solutions Mutual Funds Institutional
Wealth management and financial planning for ultra high net worth, high net worth, affluent and charity clients
Investment opportunities available in private markets, such as real estate, private equity and infrastructure, as well as alternative investments
Provision of complete solutions and partnerships, including liability offsets and risk mitigation
Branded mutual funds provided through intermediary network for retail clients
Index-relative investment components for institutions and sub-advisory mandates
Strategically-aligned view of the business
Strategically-aligned view of the business
Wealth Management
Private Assets & Alternatives
Solutions Mutual Funds Institutional
66.7
44.2
142.8
102.4
144.1
0
50
100
150
Asse
ts u
nder
man
agem
ent (
£bn)
Changing composition of our assets
0
100
200
300
400
500
600
2015 2016 2017 2018 2019
Institutional Mutual Funds
Wealth Management Private Assets & Alternatives
Solutions
Now over
50%of AUM
Asse
ts u
nder
man
agem
ent (
£bn)
Strategically-aligned view of the business
Wealth Management
Private Assets & Alternatives
Solutions Mutual Funds Institutional
302.1 300.2
226.1
734.8
502.0
0
200
400
600
800
Net
ope
ratin
g re
venu
e (£
m)
Strategically-aligned view of the business
Wealth Management
Private Assets & Alternatives
Solutions Mutual Funds Institutional
Net
new
bus
ines
s (£
bn)
14.7
2.8
34.5
(1.5)
(7.1)-10
0
10
20
30
40
Closer relationships with end clients through Wealth Management
Positive flows into Cazenove and Benchmark Capital
Launch of Schroders Personal Wealth, £13.7bn AUM at year end
Acquisition of ThirdRock in Singapore
114% increase in assets and 46% increase in revenues since 2015
£bn£bn
-5
0
5
10
15
20
01020304050607080
2015 2016 2017 2018 2019
AUM Cumulative net flows (rhs)
£bn5 year revenue CAGR of 8%
Expand Private Assets & Alternatives
£2.8bn net inflows, diversified across investment desks
Ongoing demand for alternative sources of returns
Strategic acquisitions in impact investing & real estate
Five year asset growth of 128%, revenue growth of 112%
5 year revenue CAGR of 16%
34%
19%18%
7%
7%
6%4%4% 1%
Real Estate Private EquitySec. credit GAIAImpact investing EMD ARILS Infra. FinanceCommodities
-20246810
0
10
20
30
40
50
2015 2016 2017 2018 2019AUM Cumulative net flows (rhs)
£bn£bn
Grow asset management through Solutions
Over £45bn of cumulative net flows in the last five years
Ongoing client demand for high longevity strategies
2019 saw £34.5bn of net new business, led by Scottish Widows
0
10
20
30
40
50
020406080
100120140160
2015 2016 2017 2018 2019
AUM Cumulative net flows (rhs)
£bn£bn 5 year revenue CAGR of 14%
Assets increased 114% and revenues by 90% in five years
“Risk off” environment in Mutual Funds
Redemptions from equity funds, rotated into fixed income
Risk off backdrop at start of 2019Resilient performance in 2019 with only £1.5bn of net outflows
Assets up 38%, revenues up 25% over last five years
5 year revenue CAGR of 5%
0
5
10
15
20
0
20
40
60
80
100
120
2015 2016 2017 2018 2019AUM Cumulative net flows (rhs)
£bn£bn
Institutional business facing headwinds
2019 net outflows of £7.1bn, driven by equity redemptions
33% increase in AUM and 14% in revenues over five years
Opportunities to expand geographical footprint
Commitment to sustainability across 100% of managed assets
5 year revenue CAGR of 3%
-30
-20
-10
0
10
20
30
40
020406080
100120140160180
2015 2016 2017 2018 2019
AUM Cumulative net flows (rhs) Incl. private assets and solutions
£bn£bn
Repositioning towards higher longevity areas
Shift to higher longevity products reducing gross outflows
15%
20%
25%
30%
35%
2013 2014 2015 2016 2017 2018 2019
Outflows as percentage of opening AUM
Net flows by asset class
0 5 10 15 20
Equities
Private Assets &Alternatives
Multi-asset
Fixed Income
Private Assets
Equities
Multi-asset
Fixed Income
– Diversified inflows across channels and desks
– Strong demand for Global, European,US and EMD strategies
– Positive flows into solutions
– Demand for risk-controlled growth and LDI mandates
– Further diversification in product range
– Demand led by securitised credit and private equity
– Positive flows through Scottish Widows mandate
– Structural pressures and ‘risk off’ impacting equities
Net flows by region
-10 0 10 20 30 40
Americas
EMEA
Asia Pacific
UK
– Mutual fund demand led by key markets
– Outflows from Australia and Japan
Asia Pacific
– ‘Risk off’ across region for mutual funds
– Demand for private assetsEMEA
– Strong client demand in solutions
– Uncertainty earlier in the year weighed on retail sentiment
UK
– Institutional outflows across region– Hartford flows of £0.5bn,
AUM now at £6.8bnAmericas
Peter Harrison Group Chief Executive
Richard KeersChief Financial Officer
Profit before tax and exceptional items
2018 2019Group Asset Management Wealth Management
Profit before tax and exceptional items
761.2
Profit before tax and exceptional
items 701.2
£m
93.487.5
2019
Profit before tax and after
exceptional items 624.6
Net income0.9
Compensationcosts(24.0)
Non-compensation costs(36.9)
Exceptionalitems(76.6)
670.8606.9
Profit after tax
495.7
1Before exceptional items
Profit after tax
-£9m to £495.7m
Basic EPS1
-7% to 201.6p
Final dividend of 79p taking
total dividend to 114p
Development of average AUM
£bn
400
410
420
430
440
450
460
470
480
490
500
Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19
FY-18 average AUM: £433.1bnFY-19 average AUM: £441.8bn
Average AUM AUM movement
Average AUM
+ 2%Closing AUM of
£500.2bn
Markets impact on average AUM
£bn
400
410
420
430
440
450
460
470
480
490
500
Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19
FY-18 average AUM: £433.3bnFY-19 average AUM: £443.0bn
Average AUM AUM movement
Market impact
+ 2.2%
400410420430440450460470480490500
Q1-18
Q2-18
Q3-18
Q4-18
Q1-19
Q2-19
Q3-19
Q4-19
FX impact on average AUM
£bn
400
410
420
430
440
450
460
470
480
490
500
Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19
FY-18 average AUM: £434.1bnFY-19 average AUM: £436.9bn
Average AUM AUM movement
FX impact
+ 0.6%
Net income
Net income
2018 2019 2019Group Asset Management Wealth Management
Mix(50)
Groupnet income
2,125
SPW Adjustment
11Segmentalnet income
2,136Net income
2,124
Associates and joint ventures*
9FX14
Markets43
Net new business
(51)Acquisitions
21
310
£m
290
Markets, FX and mix£7m
Performance fees and net
carried interest18
Other income
8
33 45
1,801 1,781
* Excludes SPW, which is proportionally consolidated
+ £0.9m £2,125mto
Total net operating revenue
+ 2%
1Excluding performance fees and carried interest
Average AUM
45bpsNet operating revenue margin1
+ £6m2020 tailwind from 2019 NNB
FY 2018: 47bps
(100)
(60)
(20)
20
60
100
(60)
(40)
(20)
0
20
40
60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net new business Annualised net new revenue 2018 - 2019
Net new business and annualised net new revenue(NNB and ANNR)
NNB£bn
ANNR£m
2018 2019
£m
1,931.8 2,015.7 1,992.1
78.4 55.0 73.1
0250500750
1,0001,2501,5001,7502,0002,250
Performance fees and net carried interest
2017 2018 2019
2,070.72,065.2*2,010.2
* Includes £12.8m relating to the proportional consolidation of SPW
FY 2018: £35m headwind
Wealth Management net operating revenue
+ 12%
1Excluding performance fees and carried interest
Average AUM
59bpsNet operating revenue margin1
+7%
Net operating revenue
FY 2018: 61bps
2018
0
20
40
60
80
100
0
2
4
6
8
10
12
14
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net new business Annualised net new revenue 2018 - 2019
2019
NNB£bn
ANNR£m
Net new business and annualised net new revenue(NNB and ANNR)
203.8 216.2 239.6
40.8 38.537.621.4 26.824.0
0.90.4
0.9266.9 281.9
302.1*
0
50
100
150
200
250
300
2017 2018 2019Management fees Transaction fees Net banking interest income Performance fees
£mNet operating revenue
* Includes £12.8m relating to the proportional consolidation of SPW
Asset Management net operating revenue
+ 1%
1Excluding performance fees and carried interest
Average AUM
43bpsNet operating revenue margin1
FY 2018: 45bps
(120)(90)(60)(30)0306090120
(40)(30)(20)(10)
010203040
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net new business Annualised net new revenue 2018 - 2019
2018 2019
Net new business and annualised net new revenue(NNB and ANNR)
ANNR£m
NNB£bn
1,665.8 1,734.2 1,690.9
77.5 54.6 72.21,743.3 1,788.8 1,763.1
0
500
1,000
1,500
2,000
2017 2018 2019Performance fees and net carried interest
£mNet operating revenue
Private Assets and Alternatives net operating revenue
1Excluding performance fees, net carried interest and real estate transaction fees.
63bps
Net operating revenue margin1
+ £29m
Annualised revenue impact of flows over two years:
FY 2018: 66bps
(12)
(6)
0
6
12
18
24
30
(2)
(1)
0
1
2
3
4
5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net new business Annualised net new revenue 2018 - 2019
2018 2019
Net new business and annualised net new revenue(NNB and ANNR) ANNR
£m
NNB£bn
6.1 19.431.829.3
273.7 300.2
0
100
200
300
400
2018 2019
Real estate transaction fees Performance fees and net carried interest
251.5
£m Net operating revenue
235.8
Solutions
21bps
Net operating revenue margin
+ £10m
Annualised revenue impact of flows over two years:
FY 2018: 22bps
(10)
0
10
20
30
40
(10)
0
10
20
30
40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net new business Annualised net new revenue 2018 - 2019
2018 2019
Net new business and annualised net new revenue(NNB and ANNR)
ANNR£m
NNB£bn
219.3 226.1
0
50
100
150
200
250
2018 2019
£mNet operating revenue
Mutual Funds and Institutional
Mutual Funds
73bpsNet operating revenue margin1
FY 2018: 75bps
Institutional
32bpsNet operating revenue margin1
FY 2018: 33bps
1Excluding performance fees
(80)(60)(40)(20)020406080
(10)
(6)
(2)
2
6
10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net new business Annualised net new revenue 2018 - 2019
2018 2019
NNB£bn
ANNR£m
InstitutionalNet new business and annualised net new revenue
(NNB and ANNR)
2018 2019
NNB£bn
ANNR£m
(65)
(45)
(25)
(5)
15
35
55
(10)
(6)
(2)
2
6
10
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net new business Annualised net new revenue 2018 - 2019
Mutual FundsNet new business and annualised net new revenue
(NNB and ANNR)
Net income
Net income up
2018 2019 2019Group Asset Management Wealth Management
Mix(50)
Groupnet income
2,125
SPW Adjustment
11Segmentalnet income
2,136
Net income2,124
Associates and joint ventures*
9FX14
Markets43
Net new business
(51)Acquisitions
21
310
£m
290
Markets, FX and mix£7m
Performance fees and net
carried interest18
Other income
8
33 45
1,801 1,781
* Excludes SPW, which is proportionally consolidated
£0.9m £2,125mto
Associates and Joint Ventures
Share of profit of associates and joint ventures2 +53% £30.5mto
2019 2018
SPW1 BoCom Axis Other Total Total
Profit (£m)2 3.8 66.5 11.3 16.3 97.9 61.3
Group's share of profit (£m)2 1.9 20.0 2.8 5.8 30.5 19.9
NNB (£bn) 3.8 5.2 0.4 9.4 (0.5)
AUM (£bn) 54.6 13.6 1.0 69.2 60.3
1SPW’s AUM is managed by the Group and included in the Group’s AUM2Before exceptional items
Net income
Net income up
2018 2019 2019Group Asset Management Wealth Management
Mix(50)
Groupnet income
2,125
SPW Adjustment
11Segmentalnet income
2,136Net income
2,124
Associates and joint ventures*
9FX14
Markets43
Net new business
(51)Acquisitions
21
310
£m
290
Markets, FX and mix£7m
Performance fees and net
carried interest18
Other income
8
33 45
1,801 1,781
* Excludes SPW, which is proportionally consolidated
£0.9m £2,125mto
Operating expenses
67%44%FY 2018: 64%FY 2018: 43%
Ratio of total cost to net incomeTotal compensation ratio
903.3 927.3
459.4 496.3
0
400
800
1,200
1,600
2018 2019
1,498.0
£m
97.5
Compensation costs Non-compensation costs
74.41,460.2
Exceptional items
Non-compensation costs
307.7346.6
410.8433.1 441.8
10.2 10.3
9.4
10.6
11.2
9
10
11
12
2015 2016 2017 2018 20190
100
200
300
400
500
Average AUM Non-compensation costs as bps of average AUM
Average AUM£bn bps
Change in Group Capital
2018 2019
Opening capital 3,621.2
Gain on partial sale of UK WM business
153.6Profit after tax 495.7
Other comprehensive
income (69.3)
Dividends(314.7)
£m
Other (39.0) Closing capital 3,847.5
Group capital up £226.3m £3,847.5mto
Composition of Group Capital
1Final dividend proposed for respective year2Comprises items that are inadmissible for regulatory purposes, principally goodwill, intangible assets and pension scheme surplus
1,1151,498
165 148 465 408 535 578
1,341 1,216
0
1,000
2,000
3,000
4,000
31 December 2018 31 December 2019
Capital allocation
Other items2
3,6213,848
Working capital – regulatory and other Working capital – seed and co-investmentInvestment capital – liquid
Investment capital – illiquidOther items2
1,1151,498
1,1261,127
216 216
1,1641,007
0
1,000
2,000
3,000
4,000
31 December 2018 31 December 2019
Capital base
3,8483,621
£m
Overall regulatory capital requirementDividend1
Capital surplus
Summary
Net income1
+£0.9m to £2,124.8m
Ratio of total costs to net income1 67%
Basic EPS1
-7% to 201.6p
Final dividend of 79p taking
total dividend to 114p
2,123.9 2,124.8
761.2 701.2
Profit before tax1Net income1
2018 20192018 2019
£m
1Before exceptional items.
Peter Harrison Group Chief Executive
Outlook for 2020 and beyondStructural changes to group increasing resilience
Increased market volatility likely to continue
Wide range of growth opportunities, particularly in Solutions, Private Assets and Wealth
Focused strategy, global footprint and diversified business model to deliver long-term value for clients and shareholders Retain focus on repositioning business
towards high quality, high longevity areas
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 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’, ‘aims’, ‘confident’, ‘will have’, ‘will be’, ‘will ensure’, ‘likely’, ‘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 statement. 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 these presentation slides should be construed as a forecast, estimate or projection of future financial performance.
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