Schroders
2010 Interim Results
trusted heritage
advanced thinking
Michael Dobson
Chief Executive
5 August 2010
H1 2010 overview
• Net new business £16.1bn (H1 2009: £1.8bn)
• Funds under management £164.0bn (31 Dec 2009: £148.4bn)
• Profit before tax £188.2m (H1 2009: £76.9m*)
• Earnings per share 49.4p (H1 2009: 7.0p)
• Dividend 11.0p per share (H1 2009: 10.0p)
* Before exceptional items
H1 2010
• Client led
• Broad product range
Net inflows: £16.1bn
• Strong distribution capability
• International diversification
• Financial strength
Delivering for clients
Quartile rankings 30 June 2010
Outperformance
over 1 year
37%
63%
over 3 years
26%
74%
1 year
3 year
Euro Corporate Bond
4
1
Euro Bond
1
1
Global Corporate Bond
2
1
UK Alpha Plus
1
1
UK Income
1
1
UK Income Maximiser
1
1
European Special Situations
2
1
European Alpha Plus
2
1
US Small & Mid Cap
1
1
Japan Equity Alpha
1
2
Emerging Market Equities
4
2
QEP Global Active Value
1
1
Global Equity Alpha
2
1
Emerging Market Debt
1
1
Commodities
3
1
Source: Schroders. Performance relative to benchmark or peer group to 30 June 2010
Above benchmark or peer group
Below benchmark or peer group
Broad product range
Net sales by asset class: H1 2010
Institutional
Intermediary
7% 9%
14%
24%
42%
20%
60%
24%
Equities
Alternatives
Fixed Income
Multi-asset
Strong distribution capability
Increasing gross sales
Asset Management - £bn
40
30
20
10
0
H1 2007
H2 2007
H1 2008
Equities
Alternatives
* Gross flows before netting
H2 2008
H1 2009
Fixed Income
Multi-asset
H2 2009
H1 2010
International diversification
69% of revenues outside UK
North
America
£16.8bn
South
America
£4.6bn
UK
£57.4bn
Continental
Europe
£39.9bn
Middle
East
£3.1bn
£5.1bn China joint venture
* China joint venture funds under management are not reported within Group funds under management
FUM by client domicile
Asia
Pacific
£47.3bn*
Institutional
Funds under management £87.3bn
£bn
20
• Significant increase in new
business
• Traditional and new
products
• Progress with official
institutions and insurance
companies
18.5
15
10
16.3
11.7
11.6
9.8
5
4.9
0
-3.8
-5
-6.5
-10.6
-10
• Increasing client longevity
-13.6
-15.5
-15
-20
-22.2
-25
2007
Gross sales
2008
2009
Gross outflows
H1 2010
Net inflows
Intermediary
Funds under management £62.7bn
£bn
50
• All-weather product range
40
• Developing absolute return
and income products
41.0
30
29.0
23.3
20
• Over 1,800 distributor
relationships
21.1
9.6
8.8
10
5.1
0
• Building out US
Intermediary business
-6.2
-10
-16.0
-19.4
-20
-30
-32.2
-29.5
-40
2007
2008
Gross sales
2009
Gross outflows
H1 2010
Net inflows
Intermediary
Funds under management £62.7bn
£bn
50
• All-weather product range
40
• Developing absolute return
and income products
41.0
30
29.0
23.3
20
• Over 1,800 distributor
relationships
9.6
8.8
10
10.3
3.3
10.8
1.8
0
• Building out US
Intermediary business
-7.0
-9.0
-6.2
-10
-19.4
-20
-30
-32.2
-29.5
-40
2007
2008
Gross sales
2009
Gross outflows
Q1 2010
Q2 2010
Net inflows
Private Banking
Funds under management £14.0bn
• Net new business £1.2bn
• 27% increase in management fee income
• Decline in interest income
• Higher operating costs
– recruitment
– doubtful debt provision
• Underlying momentum
Schroders
2010 Interim Results
Kevin Parry
Chief Financial Officer
5 August 2010
Key figures
Profit before tax*
tax (£m)
185.6
Compensation costs: operating revenues ratio (%)
188.2
173.3
48
47
H1 2007
H1 2008
H1 2009
46
45
76.9
H1 2010
Basic earnings per share (pence)
49.4
49.0
H1 2007
H1 2008
H1 2009
H1 2010
Interim dividend per share (pence)
35.8
9.0
10.0
10.0
11.0
H1 2009
H1 2010
7.0
H1 2007
H1 2008
* Before exceptional items
H1 2009
H1 2010
Group segment PBT before exceptional items
H1 2007 H1 2008
Profit before tax
Significant increase in net revenue
£m
300
250
Net
revenue
£205m
200
150
100
Exceptional
items
£41m
PBT
H1 2009
50 £36m
0
PBT
H1 2009
£77m
PBT
H1 2010
£188m
Significant increase in net revenue
£m
600
500
400
Margin
£13m
Markets
& FX
£73m
300
200
Net
revenue
H1 2009
100
£332m
0
Before exceptional items
Net new
business
£83m
Group
Performance £6m
fees
£30m
Net
revenue
H1 2010
£537m
Profit before tax
Cost control continues
£m
300
Comp.
Costs
£82m
250
200
Net
revenue
£205m
150
100
50
PBT
H1 2009
£77m
0
Before exceptional items
Other
Costs
£13m
Net finance
Income
£4m
JVs and
Associates
£5m
Compensation
costs:operating revenue
reduced from 49% (FY09)
to 46% (H1 10)
PBT
H1 2010
£188m
Institutional and Intermediary net revenues
£m
272
228
Asset Management net revenue margins
excluding performance fees
57bps
60bps
60bps
H2 2009
H1 2010
205
165
174
112
H1 2009
H2 2009
Institutional
Performance fees
H1 2010
Intermediary
H1 2009
Private Banking segment
£m - costs
£m - net revenue
49.2
48.5
11.5
7.8
49.9
42.9
43.3
13.6
13.8
2.0
4.7
27.3
24.8
H2 2009
H1 2010
7.6
34.7
11.8
12.1
13.4
13.6
4.3
30.5
28.6
24.1
17.0
H1 2009
H2 2009
Management fees
Transaction fees
H1 2010
Net interest income
H1 2009
Compensation costs
Doubtful debt provisions
Other costs
Operating expenses before exceptional items
£m
H1-10
H1-09
H2-09
H1 10 vs H1 09
Staff costs
242.4
160.7
230.0
+51%
Other costs
111.0
99.8
107.6
+11%
Depreciation and amortisation
10.3
8.3
8.7
+24%
Total
363.7
268.8
346.3
+35%
Compensation cost: operating revenue ratio
46%
48%
50%
-2%
Cost:income ratio
66%
78%
74%
-12%
Tax charge and earnings per share
Benefit of higher profitability
H1 2009
£m
H1 2010
Before
exceptional
items
Exceptional
items
Total
Profit before tax
188.2
76.9
(40.6)
36.3
Tax
(47.5)
(20.7)
3.1
(17.6)
Effective tax rate(%)
25%
27%
8%
48%
Profit after tax
140.7
56.2
(37.5)
18.7
Basic earnings per share
49.4p
20.3p
(13.3)p
7.0p
Group capital allocation
£m
June 2010
June 2009
Dec 2009
Cash investments
352
504
808
Private Equity
92
68
90
Other investments
263
63
20
Sub-total
707
635
918
Seed capital
160
136
141
Group capital
867
771
1,059
Asset Management & Private Banking
operational capital
727
726
590
1,594
1,497
1,649
Investment capital:
Statutory Group capital
Movement in Group cash balances
900
Share
Purchases
£143m
800
Dividend
£58m
700
600
Pension
Contribution
£58m
500
400
300
200
100
0
Group
cash
Dec ’09
£808m
Other
£3m
Re-allocation
of
Investment
capital
£194m
Group
cash
Jun’10
£352m
Outlook
Michael Dobson
Chief Executive
Outlook
• Institutional well positioned
– potential reduction in revenue margins offset by increased longevity
• Intermediary dependent on investor demand
– broadly diversified
• Private Banking new business momentum
• Range of long term growth opportunities
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