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Presentation26 July 2018
Half-year results 2018
Peter Harrison Group Chief Executive
1 Annual Results 2017
Delivering growth across the cycleRevenue growth against a challenging backdrop
Peter HarrisonGroup Chief Executive
Delivering strategy throughdiversified business model
Evolution of business model to meet client demand
Strong gross flows and positive net new business
Growth in key areas of strategic investment
2 Annual Results 2017
H1 2018 H1 2017 Change
Net income1 £1,086.1m £974.4m 11%
Ratio of total costs to net income1 63% 63% –
Profit before tax1 £397.1m £361.5m 10%AUMA2 £449.4bn £417.5bn 8%
Net new business £1.2bn £0.8bn –
Basic EPS1 114.0p 103.5p 10%Dividend per share 35p 34p 3%
1Before exceptional items.2 Assets under administration was restated at the Q3 results announcement to exclude assets from which we only derive transactional non-recurring revenues
Peter HarrisonGroup Chief Executive
Delivering strategy throughdiversified business model
Evolution of business model to meet client demand
Strong gross flows and positive net new business
Growth in key areas of strategic investment
3 Half-year results 2018
Net flows by channel£bn
Industry headwinds impacting client demand
-5
0
5
10
15
2013 2014¹ 2015 2016 2017 H1 2018
Institutional Intermediary Wealth Management
1Excludes Friends Life mandate win of £12bn in December 2014.
net new business
Strong client demand in Wealth Management
£1.2bn Net inflows in Institutional offset by redemptions in Intermediary
4 Half-year results 2018
-10
-5
0
5
10
15
2013 2014¹ 2015 2016 2017 H1 2018
Equities Fixed IncomeMulti-asset Private Assets & AlternativesWealth Management
Net flows by asset class
1Excludes Friends Life mandate win of £12bn in December 2014.
Encouraging growth in Private Assets &
Alternatives
Equity outflows driven by client
restructuring
Continued strong Multi-asset demand
5.0bn £net inflows
£0.8bnnet inflows
Demand for outcome-oriented products
and uncorrelated returns
£bn
5 Half-year results 2018
Net flows by region
NNB across North and Latin America
Positive UK net inflows,
despite outflows from large UK
insurance client
Positive net new business in most regions
Asia Pacific flat, due to Australian
redemptions-5
0
5
10
15
2013 2014¹ 2015 2016 2017 H1 2018
UK EMEA Asia Pacific Americas
1Excludes Friends Life mandate win of £12bn in December 2014.
£3.9bn £bn
Richard KeersChief Financial Officer
7 Half-year results 2018
Group segment5.4
Group segment1.0
Profit after tax and exceptional
items292.6
AssetManagement
310.6
AssetManagement
347.4
Net incomeCompensation
costs Non-compensationcosts
Tax
Exceptional items
H1 - 17 H1 - 18 H1 - 18
Profit before tax and exceptional items
Profit before tax and exceptional items up 10% £397.1m
H1 2018H1 2018H1 2017
Profit after tax and before exceptional
items 315.7
Profit before tax and exceptional
items 361.5
Profit before tax and exceptional
items 397.1
£m
to
45.5
111.7(43.7)
(32.4)48.7 (81.4)
(23.1)Wealth Management
Wealth Management
8 Half-year results 2018
Net operating revenue+£111m
Group segment20
AssetManagement
820
AssetManagement
921
WealthManagement
WealthManagement
H1 - 2017 H1 - 2018
Group segment21
Net income
Net income1,086
H1 2017
Net income974
H1 2018
Otherincome
1
Performance fees
2
Carried interest
20FX(30)
Markets50
Net new business
40
Other operating revenue
29
144
Net income up 11% £1,086.1mto
£m
134
Acquisitions+£49m
Markets and FX+£20m
9 Half-year results 2018
Average AUM up
Institutional net operating revenue
(0.7) (0.6)(3.5)
5.0
(0.7)
11.5
(1.6)
5.3
-10
-5
0
5
10
15
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
359.6 396.8 397.1
13.244.4
15.8
19.6
0
100
200
300
400
500
Performance fees Carried interest
H1 2017 H2 2017 H1 2018
Annualised revenue on net new business £m
£23bnClosing AUM of
£257.2bnfrom H1 2017
372.8
441.2 432.5
£m
2016 2017 2018
Net operating revenue margin1
31 bps(FY 2017: 32bps)
1Excluding performance fees and carried interest
10 Half-year results 2018
436.5 472.9 478.6
19.9436.5
492.8478.6
0
100
200
300
400
500
Performance fees
H1 2017 H2 2017 H1 2018
Intermediary net operating revenue
1.4
(8.9)
19.9
(1.8)
18.6
6.6
12.8
(13.3)
-20
-10
0
10
20
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Annualised revenue on net new business £m £m
Closing AUM of
£132.1bn2016 2017 2018
Average AUM up
£10bnfrom H1 2017
Net operating revenue margin1
72bps(FY 2017: 72bps)
1Excluding performance fees
11 Half-year results 2018
Wealth Management net operating revenueAnnualised revenue on net new business
98.6105.2 106.2
21.019.8 20.6
10.610.8 12.80.6
0.3 0.3130.8 136.1 139.9
0
20
40
60
80
100
120
140
H1 2017 H2 2017 H1 2018
Management fees Transaction feesNet banking interest income Performance fees
0.1
(1.1) (0.5)
2.7
1.4
3.7
1.6
5.0
-5.0
-2.5
0.0
2.5
5.0
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Net operating revenue up
7%Closing AUM of
£46.4bnfrom H1 2017
£m £m
2016 2017 2018
62bps(FY 2017: 61bps)
Net operating revenue margin1
1Excluding performance fees
12 Half-year results 2018
Total compensation ratio
43.5%H1 2017: 44.0%
Operating expensesAnnual Results 2017
428.3472.0
184.6
217.0
0
100
200
300
400
500
600
700
H1 2017 H1 2018
689.0
629.2
706.6Ratio of total costs to net income
63%£m
612.9
16.3
17.6
Compensation costs Non-compensation costs Exceptional items
H1 2017: 63%
13 Half-year results 2018
Group Capital
12017 final dividend/2018 interim dividend proposed2Comprises goodwill, intangible assets, pension scheme surplus, other associates and joint ventures, and deferred tax.3Includes RWC Partners Limited and Schroder Ventures Investment Limited associates.
1,146 1,311
944976
216 96
1,165 1,139
0
1,000
2,000
3,000
4,000
31 December2017
30 June2018
Capital base
Capital surplus
Dividend¹
Overall regulatorycapital requirement
Other items²
1,146 1,311
147 149
696 565
392 580
1,090 917
0
1,000
2,000
3,000
4,000
31 December2017
30 June2018
Capital allocation
3,522 3,4713,471 3,522
Working capital – Other
Working capital – Seed and co-investment
Investment capital – Liquid
Investment capital – Illiquid3
Other items2
£m £m
14 Half-year results 2018
SummaryA growing business delivering on strategy
Net income up
11% to £1,086.1m
Ratio of total costs to net income
63%
Profit before tax and exceptional items up
10% to £397.1m
10% to 114.0pBasic EPS up
3% to 35pInterim dividend up
974.4[
361.5
Profit before tax and exceptional items
Net income
H1 2017 H1 2018H1 2017 H1 2018
1,086.1
397.1
£m
All figures quoted are before exceptional items
Peter Harrison Group Chief Executive
16 Half-year results 2018
NorthAmerica
AsiaPacific
Technology PrivateAssets &
Alternatives
WealthManagement
Productinnovation
and Solutions
FixedIncome andMulti-asset
Key areas of strategic growthInvesting in future growth drivers
17 Half-year results 2018
Continued momentum in North AmericaStrong client demand in key strategic area
£2.8bnof net new business
£2.4bnnet inflows from Institutional clients
Hartford range
£5.1bnAUM
£0.6bnnet inflows from Canada
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
2012 2013 2014 2015 2016 2017 H1 2018
Institutional Intermediary branded Intermediary sub-advised
£bn
18 Half-year results 2018
Growth in Private Assets & Alternatives
£35.8bn assets under management
Expandinginvestment expertise
Client demand in first half of
£0.8bn
19 Half-year results 2018
Continued organic growth
Wealth Management
Strong financial performance
Diversified client base driving net inflows
Reinforced management
team
OutlookGrowth through investment in key opportunities
Continued evolution of business towards areas of client demand
Delivering strategy through diversified business model
Driving revenue growth through investment in key strategic areas
21 Half-year results 2018
Thank you
22
Forward looking statementsThese 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.
