Presentation 1 August 2019 - Schroders · Presentation 1 August 2019 Half-year results 2019. 1...

Peter Harrison Group Chief Executive

Presentation

1 August 2019

Half-year results 2019


Peter HarrisonGroup Chief Executive

Good progress in partnership with Lloyds

Continued investment in growth areas

Subdued investor demand in “risk off” environment

Selective acquisitions aligned to strategic objectives

Strategic focus for long-term growth


Peter HarrisonGroup Chief Executive

Good progress in partnership with Lloyds

Continued investment in growth areas

Subdued investor demand in “risk off” environment

Selective acquisitions aligned to strategic objectives

H1 2019 H1 2018 Change

Net income1 £1,032.6m £1,086.1m (5)%Profit before tax1 £340.4m £397.1m (14)%AUM £444.4bn £435.7bn 2%Net new business £(1.2)bn £1.2bn –Basic EPS1 98.6p 114.0p (14)%Total dividend per share 35.0p 35.0p –

1 Before exceptional items.


Ongoing “risk off” environment across Intermediary

£bn

Continued subdued investor demand

(15)

(10)

(5)

0

5

10

15

2015 2016 2017 2018 H1 2019

Institutional Intermediary Wealth Management

Continued momentum in Wealth Management

Positive net new business from Institutional clients

Net flows by channel


Net flows by region

(3)

(2)

(1)

0

1

2

3

4

UK Asia Pacific Americas EMEA

£bn

Despite macro concerns, positive net flows

Outflows driven by Australian redemptions

Challenging market across both channels

Small Institutional outflows in North and Latin America

Institutional demand for Multi-asset and Fixed Income

Partly offset by clients in mainland China, Singapore & Taiwan

Intermediary outflows concentrated on equity funds

Net inflows into Hartford range, now £5.8bn AUM

UK

Asia Pacific

Americas

EMEA


Net flows by asset classPositive net new business across both channels

Continued demand for Multi-asset strategies

Ongoing momentum in segment

Outflows through one real estate mandate

Institutional flows into US & convertibles, Intermediary for EMD and European credit

Led by UK Institutional clients into LDI and risk mitigation

Positive flows across both Cazenove and Benchmark

Continued demand for securitised credit(8)

(6)

(4)

(2)

0

2

4

Fixed Income Multi-asset WealthManagement

PrivateAssets &

Alternatives

Equities

£bn

Limited demand with “risk off” across both channels

Global and EAFE strategies generated positive flows

Fixed Income

Multi-asset

Wealth Management

Private Assets

Equities

Richard Keers

Chief Financial Officer

6


Profit before tax and exceptional items

7

Profit before tax and exceptional items -14% £340.4mto

Group segment1.0

Group segment4.8

Profit before tax

319.3

AssetManagement

347.4

AssetManagement

292.4

Net income Compensationcosts

Non-compensation costs Exceptional items

(21.1)

H1 - 17 H1 - 18 H1 - 18H1 2019H1 2019H1 2018

Profit before tax and

exceptional items

397.1

Profit before tax and

exceptional items

340.4

£m

48.7

(53.5)18.6 (21.8)

43.2Wealth Management

Wealth Management


Net income

8

Net income -5% £1,033mto

2017 2018

AssetManagement

921

AssetManagement

865

WealthManagement

WealthManagement

Group segment24

Group segment21

Net operating revenue£(58)m

Net income1,033

Net income1,086

Otherincome

5

Performance

fees

(14)

FX11

Markets(42)

Net new business

(23)Acquisitions

4

144

£m

144

Markets and FX£(31)m

Performance fees and net carried interest

£(8)m

H1 2018

Net carried interest

6

H1 2019


Asset Management net operating revenue

9

£m

Closing AUM of

£393.7bnAverage AUM

-£12bn from HY 18

Net operating revenue margin1

44bps1Excluding performance fees and net carried interest

(100)

(80)

(60)

(40)

(20)

0

20

40

60

(10)

(8)

(6)

(4)

(2)

0

2

4

6

Q1 Q2 Q3 Q4 Q1 Q2

Net new businessAnnualised net new revenue 2018 - 2019

NNB£bn

ANNR£m

Net new business and annualised net new revenue(NNB and ANNR)

2018 2019

0100200300400500600700800900

1,000

Performance fees and net carried interest

H1 2018 H2 2018 H1 2019

877.7

875.7 858.5

911.1852.935.4 19.2 27.3

825.6


Wealth Management net operating revenue

10

106.2 110.0 109.3

20.6 17.9 18.312.8 14.0 12.70.3 0.1 0.1

0

20

40

60

80

100

120

140

160

H1 2018 H2 2018 H1 2019

Performance fees Net banking interest incomeTransaction fees Management fees

139.9 142.0 140.4

Average AUM

+£1bn from HY 18

Closing AUM of

£50.7bn

£m

60bpsNet operating revenue margin1

1Excluding performance fees

0

2

4

6

8

10

12

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Q1 Q2 Q3 Q4 Q1 Q2

Net new businessAnnualised net new revenue 2018 - 2019

2018 2019

Net new business and annualised net new revenue(NNB and ANNR)

NNB£bn

ANNR£m


Operating expenses

11

Total compensation ratio

44.0%H1 2018: 43.5%

Ratio of total cost to net income

67%H1 2018: 63%

472.0 453.4

217.0 238.8

0

100

200

300

400

500

600

700

800

H1 2018 H1 2019

692.2

706.6

[X]

689.0

17.6711.3

19.1

Compensation costs

Non-compensation costs

Exceptional items

£m


Group capital

12

1,115 1,154

1,126 1,084

216 96

1,164 1,242

0

1,000

2,000

3,000

4,000

31 December2018

30 June2019

Capital base

1Final 2018 dividend/proposed 2019 interim dividend2Comprises regulatory deductions, principally goodwill, intangible assets and pension scheme surplus

1,115 1,154

165 176 465 474

535 567

1,341 1,205

0

1,000

2,000

3,000

4,000

31 December2018

30 June2019

Capital allocation

3,576 3,6213,621 3,576

Working capital – Other Working capital – Seed and co-investmentInvestment capital – LiquidInvestment capital – IlliquidOther items2

£m

Other items2

Overall regulatory capital requirement

Dividend1

Capital surplus


SummaryNet income1

-5% to £1,032.6m


-14% to £340.4m

Interim dividend unchanged at

35.0p

Basic EPS before exceptional items

-14% to 98.6p

£m

1Before exceptional items.

1,086.11,032.6

397.1340.4


Net income1

H1 2018 H1 2019H1 2018 H1 2019

Peter Harrison Group Chief Executive


Developments to reinforce long-term strategy

Expand core business

Scottish Widows mandate

Grow Private Assets & Alternatives

Real Estate: Blue Asset Management

Impact investing:BlueOrchard

Thirdrock

Closer proximity to consumer

Schroders Personal Wealth Progress in China


OutlookFocused strategy for long-term growth

Strong pipeline despite environment of limited investor demand

Progress against strategic objectives to drive future growth


Forward looking statements

17

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.

Presentation 1 August 2019 - Schroders · Presentation 1 August 2019 Half-year results 2019. 1...

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