Schroders2010 Annual Results

Michael DobsonChief Executive

10 March 2011

trusted heritageadvanced thinking

1

2010: record year

• 81% of funds outperforming over 3 years

• Net new business £27.1bn (2009: £15.0bn)

• Funds under management £196.7bn (2009: £148.4bn)

• Profit before tax £406.9m (2009: £137.5m)

• Earnings per share 111.8p (2009: 34.3p)

• Dividend 37.0p per share (2009: 31.0p)

• Investment in organic growth

• Focus on investment performance

• Broad product range

• Proven distribution capability

• Global franchise

• Strong financial position

2

Asset class diversification: gross inflows

£bn

2009 20102008200720060

10

20

30

40

50

60

70

80

Equities Fixed Income Multi-Asset Alternatives Private Banking

38.0

56.6

41.6

54.1

77.9

3

Asset class diversification: net inflows

0

2

4

6

8

10

12

Q1 2010 Q2 2010 Q3 2010 Q4 2010Equities Fixed Income AlternativesMulti-asset Private Banking

£bn

9.7

6.45.4 5.6

4

Regional diversification: net inflows76% from clients outside the UK

NorthAmerica£4.0bn

South America£1.8bn

ContinentalEurope£4.4bn

UK£6.5bn

Asia Pacific £9.5bnMiddle

East£0.9bn

5

£5.2bn China joint venture

* China joint venture funds under management are not reported within Group funds under management

NorthAmerica£20.8bn

South America£6.5bn

ContinentalEurope£44.9bn

UK£68.2bn Asia

Pacific £52.1bn*

MiddleEast

£4.2bn

Regional diversification: funds under management67% of revenues from clients outside UK

6

InstitutionalFunds under management: £106.4bn (2009: £76.7 bn)

16.8

31.4

11.6 11.7

18.5

-14.6

-22.2

-15.5-13.6

4.9

-3.8

-10.6

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

35

2007 2008 2009 2010

Gross inflows Gross outflows Net inflows

£bn

• Shift from DB pensions to sovereign wealth funds, financial institutions

• Mandates from large clients

• Momentum in fixed income, emerging market equities, alternatives and new asset classes

– quant equities

– multi-asset

– LDI

• Revenue margins unchanged

7

IntermediaryFunds under management: £74.1bn (2009: £59.1bn)

7.9

39.341.0

23.3

29.0

-31.4-32.2-29.5

-19.4

9.6

-6.2

8.8

-40

-30

-20

-10

0

10

20

30

40

50

2007 2008 2009 2010

Gross inflows Gross outflows Net inflows

£bn

• Gross sales up 36%

• Top 3 year in net sales

• Redemptions in Asia

• Progress in sub-advisory in US, Japan

• Growth potential with insurance partners, pre and post retirement market

• High capacity, scalable products

8

Private BankingFunds under management: £16.2bn (2009: £12.6 bn)

• Strength of investment and client service proposition

• Additional client facing private bankers

• Record level of net new business

• Reduction in revenue margins

– lower management fees on large mandates

– lower interest income

– lower transaction fees

• Higher staff costs

• Doubtful debt provisions in the UK

• Business positioned for increased profitability in 2011

Schroders

Kevin ParryChief Financial Officer

10 March 2011

2010 Annual Results

10

Cost: operating revenues ratio (%)

2008 2009 20102007

71 7379

70

2007 2008 2009 2010

Profit before tax (£m)392.5

137.5

406.9

123.1

Contribution from private equity

200.2290.5

334.0

58.5

Earnings per share (pence)

2008 2009 20102007

104.8

27.5 34.3

111.8

75.554.0

Key figures

6472

7867

Total costs: net revenue ratio (%)

2008 2009 20102007

Dividend per share (pence)

2008 2009 20102007

30.0 31.0 31.0

37.0

11

Profit before tax

0

100

200

300

400

500

600

PBT 2010

£407mPBT2009

£138m

Net revenue£367m

Significant increase in net revenue

PBT2009

£200m

Exceptional items£62m

£m

12

0

200

400

600

800

1,000

1,200

1,400

Significant increase in net revenue

Netrevenue

2009

£789m

Netrevenue

2010

£1,156m

Net new business

£154m

Markets and FX £129m

Performance fees £39m

Group revenue

£45m

Before exceptional items

£m

13

Profit before tax

£m

0

100

200

300

400

500

600

Before exceptional items

Net revenue£367m

PBT2009

£200m

Comp. costs£115m

PBT2010

£407m

Revenue growth flows through to the bottom line

Other costs£44m

Net finance income

£1m

Compensation costs: operating revenue

reduced from 49% (2009) to 45% (2010)

14

Institutional net revenues

Institutional Performance fees

2010 NNB19%

Markets/FX38%

Other fees3%

Performance fees22%

2009 NNB18%

308 286

433

Breakdown of £147m net revenue increase£m

2008 2009 2010

15

Intermediary net revenues

441393

563

Intermediary

Breakdown of £170m net revenue increase£m

2010 NNB18%

Markets/FX40%

Other fees2%

Performance fees3%

2009 NNB37%

2008 2009 2010

16

Institutional and Intermediary net revenues

Institutional Intermediary

Performance fees

308

441

286

393433

563

£m Asset Management net revenue marginsexcluding performance fees

59bps59bps62bps

2008 2009 20102008 2009 2010

17

Institutional and Intermediary net revenues

Institutional Intermediary

Performance fees

308

441

286

393433

563

£m Asset Management net revenue margins

63bps62bps66bps

2008 2009 20102008 2009 2010

18

67%

45%

774.0

17.5

251.0

505.5

2010

-4%49%Compensation cost: operating revenue ratio

-11%78%Cost:net revenue ratio

+26%

-11%

+23%

+29%

2010 vs 2009

204.7Other costs

19.7Depreciation and amortisation

615.1

390.7

2009£m

Staff costs

Total

Operating expenses before exceptional items

Non-recurring20%

Regulatory and legal burden

40%

Client facing and IT19%

Other21%

Breakdown of increase in costs

19

Private Banking segment

Management fees Net interest incomeTransaction fees

£m – net revenue

111.3

97.7103.3

28.7 25.723.3

52.754.0

64.7

19.315.328.6

2008 2009 2010Compensation costs Other costs Doubtful debt provisions

£m – costs

71.6

77.693.2

40.7 44.355.5

1.26.3

7.529.7

27.0

30.2

2008 2009 2010

20

34.3p(19.7)p54.0p111.8pEarnings per share

5.8%18.1%Return on capital (%)

311.2

23.5%

(95.7)

406.9

2010

2009

(41.8)7.8(49.6)Tax

30.4%12.4%24.8%Effective tax rate(%)

95.7(54.9)150.6Profit after tax

137.5(62.7)200.2Profit before tax

Exceptional items

Before exceptional

items Total

£m

Tax charge and earnings per shareBenefit of higher profitability

21

Groupcapital Dec ’09

£1,649m

500

750

1,000

1,250

1,500

1,750

2,000

2,250

GroupCapital

2009£1,649m

GroupCapital

2010£1,800m

Movement in Group Capital

PAT£311m

Dividends£88m

FX£28m

Pensions and other

£7m

Share issues£45m

Sharepurchases

£152m

22

35%

20%3%8%

10%

10%

12%2%

Cash and cash equivalents Seed capital: alpha exposuresLong Opus fixed income Long global macroLong only EMD absolute return Long only multi-asset absolute returnLegacy private equity Other

Group capital allocation

Investment capital breakdown (%)

1,800

162

864

774

Dec 2010

1,649

126

709

814

Dec 2009

Statutory Group capital

£m

Investment capital*

Asset Management & Private Banking operational capital

Other (intangibles etc.)

* Not included in FUM

Outlook

Michael DobsonChief Executive

24

Outlook

• Economic recovery continues but markets remain volatile

• Continued investment in:

– talent

– IT infrastructure

– risk & compliance

• Well positioned for long-term growth

25

Private Asset Manager Client service quality and

Image and reputation awards - UHNW

26

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