Schroders 2013 Results
Michael Dobson Chief Executive
6 March 2014
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Net revenue up 24% to £1,407.6m (2012: £1,134.9m)
Profit before tax and exceptional items up 41% to £507.8m (2012: £360.0m)
Full year dividend up 35% to 58.0 pence per share (2012: 43.0 pence per share)
Net new business £7.9bn
Acquisitions: Cazenove Capital, STW
Assets under management up 24% to £262.9bn
2013: Record results Organic growth and strategic acquisitions
2013 Annual Results | March 2014 1
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Gross inflows £70.3bn (2012: £53.6bn)
Net inflows £9.4bn
Stable revenue margins
Diversified by channel, region
68% of funds outperforming over 3 years
2013 net flows – by channel £bn
Asset Management Strong levels of new business
2013 net flows – by region £bn
Asset Management net flows only
2013 Annual Results | March 2014
-4
-2
0
2
4
6
Q1 Q2 Q3 Q4
UK Europe Asia-Pacific Americas
-2
0
2
4
6
Q1 Q2 Q3 Q4
Institutional Intermediary
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Net inflows £4.6bn
Multi-asset, equities, fixed income, alternatives
Strong performance in Australia, UK
70% of Institutional funds outperforming over 1 year
Performance fees £35.1m
2013 net inflows by asset class £bn
Institutional Assets under management: £144.3bn (2012: £123.7bn)
2013 Annual Results | March 2014
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Q1 2013 Q2 2013 Q3 2013 Q4 2013
Equities Multi-asset Fixed Income EMD/Property
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Net inflows £4.8bn
Net inflows in all regions, multi-asset and equities
New product launches
Cazenove Capital strengthens UK Intermediary: UK
equities, European equities, multi-manager, fixed income
70% of Intermediary funds outperforming over 1 year
Performance fees £45.1m
2013 net inflows by asset class £bn
Intermediary Assets under management: £88.5bn (2012: £72.0bn)
2013 Annual Results | March 2014
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Q1 2013 Q2 2013 Q3 2013 Q4 2013
Equities Multi-Asset Fixed Income EMD/Property
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Net inflows £2.8bn: Asian, emerging market, Japanese, global, European
70% of funds outperforming over 3 years
Diversified range of strategies: global, regional, quant, growth, value, income, small and mid cap
Integration of Cazenove Capital investment teams
Selective additions to talent pool
Equities Assets under management: £119.6bn (2012: £96.3bn)
5 2013 Annual Results | March 2014
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Multi-asset investments and portfolio solutions Assets under management: £52.3bn (2012: £42.8bn)
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£21.3bn of net new business since 2010
£6.9bn in 2013
Organised across investment outcomes: wealth preservation
risk controlled growth
income
inflation protection
risk mitigation
Growth opportunities diversified across outcomes, regions, Institutional and Intermediary
2013 Annual Results | March 2014
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Strong performance: 78% of AUM outperforming over 1 year, 70% over 3 years
Consultant upgrades and new business opportunities in: unconstrained
absolute return
long duration
global/European credit
STW integration on track, investment performance above target
Acquired 30% shareholding in insurance linked securities business - AUM increased from $250m to $1.1bn in 7 months
Established capability in convertibles in December 2013: AUM £1.4bn
Positioned for growth
Fixed Income Assets under management: £43.4bn (2012: £37.6bn)
7 2013 Annual Results | March 2014
Insurance linked securities AUM as at 28 February 2014
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Net revenues up 59% to £150.0m (2012: £94.4m)
Profit before tax and exceptional items up 191% to £34.3m (2012: £11.8m)
Exceptional items: Cazenove Capital amortisation and integration costs, US DoJ programme provision
Net outflows £1.5bn
AUM up 85% to £30.1bn (2012: £16.3bn)
Significantly increased scale in the UK
Broader client offering
New leadership
Wealth Management Assets under management: £30.1bn (2012: £16.3bn)
8 2013 Annual Results | March 2014
Schroders 2013 Annual Results
Richard Keers Chief Financial Officer
6 March 2014
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37 39 43 58 0
10
20
30
40
50
60
70
2010 2011 2012 2013108.3 111.9 101.3 144.6
50
70
90
110
130
150
2010 2011 2012 2013
406.9 407.3 360.0 447.5
60.3
0
100
200
300
400
500
600
2010 2011 2012 2013
1,083 1,115 1,106 1,327
73 38 29
81
0
200
400
600
800
1000
1200
1400
1600
2010 2011 2012 2013
Profit before tax and exceptional items (£m) Net revenue, including performance fees (£m)
Financial highlights
Diluted earnings per share before exceptional items (pence) Dividend per share (pence)
1,135 1,153 1,156
10
1,408 507.8
Exceptional items (£m)
2013 Annual Results | March 2014
– record results deliver 35% increase in dividend
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Group Segment 26
Group Segment 11
Asset Management
1,015
Asset Management 1,251
Asset Management 1,251
Asset Management
1,247
Wealth Management 94
Wealth Management 150
Net new business 56
Investment Returns 96
Performance fees 52
Cazenove Capital and STW 80
Group revenue (15)
Other revenue 4
2012 2013
Net revenue – driven by investment returns, organic growth and
acquisitions Increase of £273m
Cazenove and STW revenue contribution excludes performance fees.
Net revenue
1,135
Net revenue
1,408
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£m
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427 465 522
27 24
35
0
100
200
300
400
500
600
700
800
Institutional Performance fees
Asset Management net revenues (1) – good core business growth
in Institutional
£m
454
489
557
2011 2012 2013
12 2013 Annual Results | March 2014
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427 465
522 578
522
645
27
10
24 4 35
45
0
100
200
300
400
500
600
700
800
Institutional Intermediary Performance fees
Asset Management net revenues (2) – significant rise in Intermediary
Net revenue margins, excluding performance fees, at 53 bps
£m
454
588
489 526
557
690
2011 2012 2013
13 2013 Annual Results | March 2014
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75.0 68.7
109.7
24.9 19.8
26.7
14.4
13.8
13.6
114.3 94.4
150.0
(7.9)
0
-10
10
30
50
70
90
110
130
150
170
2011 2012 2013
Management fees Transaction fees Net banking interest income Loan loss provisions
Wealth Management net revenues – up 59% supported by Cazenove
acquisition
£m Net revenue margins 64 bps (2012: 63 bps*)
14
* Excluding loan losses in 2012 of £7.9 million
2013 Annual Results | March 2014
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Compensation costs (107)
Other costs (22)
Net revenue 273
Net finance income/JVs and associates
4
Profit before tax 360
Profit before tax and exceptional items
508
Profit before tax and exceptional items – a good picture with record
profits Increase of £148m
2012 2013
Wealth Management
12
Asset
Management
348
Group Segment
5
Wealth
Management
34
Group Segment
0
Asset
Management
469
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£m
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Operating expenses – ratios in line with long-term target Before exceptional items
£m 2012
2013
2013 versus 2012
Asset
Management &
Group
Wealth
Management Total
Compensation costs 545.7 583.4 69.1 652.5 +20%
Other costs 233.5 208.8 45.9 254.7 +9%
Depreciation 12.0 11.8 0.7 12.5 +4%
Total 791.2 804.0 115.7 919.7 +16%
Headcount 3,011 2,933 595 3,528 +17%
% 2012 2013
Compensation cost:operating revenue ratio 49% 46%
Cost:net revenue ratio 70% 65%
16 2013 Annual Results | March 2014
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Exceptional items
2013
£m Asset Management
Wealth
Management Group Total
Acquisition costs - - 4.2 4.2
Integration costs 4.0 7.2 - 11.2
Amortisation of acquired intangible assets – Cazenove and
STW 6.3 5.2 - 11.5
Amortisation of acquired intangible assets – other 3.2 0.8 - 4.0
Deferred compensation arising from acquisitions - - 11.7 11.7
Sub-total 13.5 13.2 15.9 42.6
US Department of Justice provision and related costs - 17.7 - 17.7
Total 13.5 30.9 15.9 60.3
17 2013 Annual Results | March 2014
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Group segment before exceptional items – investment capital returns
targeted to cover costs
Segment disclosure (£m) 2012 2013
Net revenue 25.7 10.4
Operating expenses (37.2) (19.1)
Net finance income 11.7 12.1
Share of JVs and associates (0.5) 1.5
Group segment (loss)/profit before exceptional items (0.3) 4.9
Other comprehensive loss (9.0) (1.1)
(9.3) 3.8
18 2013 Annual Results | March 2014
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Tax charge – unchanged and in line with guidance
2012
2013 Change
2013 v 2012
before
exceptional items
Before
exceptional items Exceptional items Total
Profit before tax – £m 360.0 507.8 (60.3) 447.5 +147.8 +41%
Tax – £m (76.8) (103.0) 8.2 (94.8) +26.2 +34%
Profit after tax – £m 283.2 404.8 (52.1) 352.7 +121.6 +43%
Effective tax rate 21.3% 20.3% 13.6% 21.2%
Basic earnings per share 104.7p 149.9p (19.3)p 130.6p +45.2p +43%
19 2013 Annual Results | March 2014
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Movement in Group capital Increase of £199m as at 31 December 2013
1 January 2013 31 December 2013
£m
20 2013 Annual Results | March 2014
Profit after tax and exceptional items
353
Other 131
Group capital 2012
£2,070m
Group capital 2013
£2,269m
Share purchases (142)
Dividends (124)
Exchange differences
(19)
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Group capital allocation – continued strong financial position Increase of £199m as at 31 December 2013
*Not included in AUM
£m
December
2012
June
2013
December
2013
Asset Management
and Wealth Management
operational capital
957 879 1,071
Investment capital* 926 1,077 677
Other
(intangibles etc.) 187 229 521
Statutory Group capital 2,070 2,185 2,269
Investment capital breakdown (%)
30%
27%
21%
15%
5% 2%
Government guaranteed bonds
Seed capital
Cash deposits, CDs andcommercial paper
Multi-asset
Legacy private equity
Alternatives
21 2013 Annual Results | March 2014
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Strong financial position
Record profitability in 2013
Good cost control
Strong cash generation
Significant increase in returns to shareholders
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Schroders 2013 Results
6 March 2014
Michael Dobson Chief Executive
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Outlook and future priorities Focus on organic growth
Positive start to 2014
Complete integration of Cazenove Capital and STW
Repositioned capability and contribution from Wealth Management
Growth opportunities in most asset classes and regions
Operational efficiencies
Long-term focus
24 2013 Annual Results | March 2014
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These presentation slides may contain forward-looking statements with respect to the financial condition, results of
operations, strategy and businesses of the Schroders Group. Such statements and forecasts involve risk and uncertainty
because they are based on current expectations and assumptions but they relate to events and depend upon
circumstances in the future and you should not place undue reliance on them. Without limitation, any statement preceded
by or followed by or that include the words ‘targets’, ‘plans’, ‘believes’, ‘expects’, ‘aims’ or ‘anticipates’ or the negative of
these terms and 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 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.
Forward-Looking Statements
25
25 2013 Annual Results | March 2014