Half-year results 2019 Presentation 1 August 2019 Peter Harrison - PowerPoint PPT Presentation

Half-year results 2019 Presentation 1 August 2019 Peter Harrison Group Chief Executive

Strat rategi egic foc c focus us for for long lo ng-term grow term growth th Peter Harrison Group Chief Executive Selective acquisitions Continued investment aligned to strategic in growth areas objectives Subdued investor Good progress in demand in “risk off” partnership with Lloyds environment 1 Half-year results 2019

H1 2019 H1 2018 Change £1,032.6m £1,086.1m (5)% Net income 1 £340.4m £397.1m (14)% Profit before tax 1 £444.4bn £435.7bn 2% AUM £(1.2)bn £1.2bn – Net new business 98.6p 114.0p (14)% Basic EPS 1 35.0p 35.0p – Total dividend per share Peter Harrison Group Chief Executive Selective acquisitions Continued investment aligned to strategic in growth areas objectives Subdued investor Good progress in demand in “risk off” partnership with Lloyds environment 1 Before exceptional items. 2 Half-year results 2019

Net et fl flows ws by by chann annel el £bn 15 10 5 0 (5) (10) (15) 2015 2016 2017 2018 H1 2019 Institutional Intermediary Wealth Management Continued subdued investor demand Positive net new Ongoing “risk off” Continued momentum business from environment across in Wealth Management Institutional clients Intermediary 3 Half-year results 2019

Net et fl flows ws by by reg egion UK Institutional Despite macro demand for concerns, positive Multi-asset and net flows Fixed Income £bn 4 Asia Pacific 3 Partly offset by Outflows driven by clients in mainland 2 Australian China, Singapore redemptions 1 & Taiwan 0 Americas (1) Small Institutional Net inflows into (2) outflows in North Hartford range, and Latin America now £5.8bn AUM (3) UK Asia Pacific Americas EMEA EMEA Intermediary Challenging outflows market across concentrated both channels on equity funds 4 Half-year results 2019

Net et fl flows ws by by asse set t class ass Fixed Income Institutional flows into US Positive net new & convertibles, business across both Intermediary for EMD channels and European credit £bn Multi-asset 4 Led by UK Institutional Continued demand for clients into LDI and Multi-asset strategies 2 risk mitigation 0 Wealth Management Positive flows across (2) Ongoing momentum both Cazenove in segment and Benchmark (4) Private Assets (6) Outflows through one Continued demand for real estate mandate securitised credit (8) Fixed Income Multi-asset Wealth Private Equities Management Assets & Alternatives Equities Limited demand with Global and EAFE strategies generated “risk off” across both positive flows channels 5 Half-year results 2019

Richard Keers Chief Financial Officer 6

Profit ofit be befo fore re tax x and d ex excep eptiona tional l item ems £m £m Profit before Profit before tax and tax and Non-compensation Compensation exceptional items Net income exceptional costs costs Exceptional items 397.1 (53.5) items (21.8) 18.6 (21.1) 48.7 340.4 43.2 Wealth Wealth Management Management Asset Profit before Asset Management tax Management 347.4 319.3 292.4 Group segment Group segment 1.0 4.8 H1 2019 H1 2019 H1 2018 H1 - 17 H1 - 18 H1 - 18 exceptional items -14% £340.4m Profit before tax and to 7 Half-year results 2019

Net et income me Net operating revenue £(58)m £m Performance fees and Markets and FX net carried interest £(31)m £(8)m Other Net new Net carried Performance Net income income Markets business Acquisitions FX Net income interest fees 1,086 (42) 5 (23) 4 11 1,033 6 (14) 144 144 Wealth Wealth Management Management Asset Asset Management Management 921 865 Group segment Group segment 21 24 2017 H1 2018 H1 2019 2018 Net income - 5% £1,033m to 8 Half-year results 2019

Asse set t Ma Manag nagem emen ent t net et ope peratin ating g rev even enue ue Net new business and annualised net new revenue £m (NNB and ANNR) ANNR 1,000 NNB 911.1 877.7 Net new business £m £bn 852.9 900 35.4 Annualised net new revenue 2018 - 2019 19.2 27.3 6 60 800 4 40 700 2 20 600 0 0 500 825.6 875.7 858.5 (2) (20) 400 (4) (40) 300 (6) (60) 200 (8) (80) 100 (10) (100) 0 Q1 Q2 Q3 Q4 Q1 Q2 H1 2018 H2 2018 H1 2019 2018 2019 Performance fees and net carried interest Average AUM Net operating revenue margin 1 Closing AUM of -£12bn 44bps £393.7bn from HY 18 1 Excluding performance fees and net carried interest 9 Half-year results 2019

Wea ealth lth Ma Manag nagem ement ent net et ope peratin rating g rev even enue ue Net new business and annualised net new revenue £m (NNB and ANNR) NNB ANNR 160 £bn £m Net new business 142.0 140.4 139.9 Annualised net new revenue 2018 - 2019 0.1 140 0.3 0.1 1.2 12 14.0 12.7 12.8 120 18.3 17.9 20.6 1.0 10 100 0.8 8 80 0.6 6 60 110.0 109.3 106.2 0.4 4 40 0.2 2 20 0 0.0 0 H1 2018 H2 2018 H1 2019 Q1 Q2 Q3 Q4 Q1 Q2 Performance fees Net banking interest income 2019 2018 Transaction fees Management fees Average AUM Net operating revenue margin 1 Closing AUM of +£1bn 60bps £50.7bn from HY 18 1 Excluding performance fees 10 Half-year results 2019

Ope peratin ating g ex expe penses ses £m 800 706.6 Total 711.3 44.0% 700 19.1 17.6 compensation 600 ratio 217.0 238.8 H1 2018: 43.5% 500 400 [X] 692.2 689.0 300 472.0 453.4 200 67% 100 Ratio of total cost to net 0 H1 2018 H1 2019 income H1 2018: 63% Exceptional items Non-compensation costs Compensation costs 11 Half-year results 2019

Group up capit pital al £m 4,000 4,000 3,621 3,576 3,621 3,576 1,164 3,000 3,000 1,242 1,205 1,341 216 96 567 2,000 2,000 535 1,084 1,126 474 465 176 165 1,000 1,000 1,154 1,154 1,115 1,115 0 0 31 December 30 June 31 December 30 June 2018 2019 2018 2019 Capital base Capital allocation Working capital – Other Capital surplus Working capital – Seed and co-investment Dividend 1 Investment capital – Liquid Overall regulatory capital requirement Investment capital – Illiquid Other items 2 Other items 2 1 Final 2018 dividend/proposed 2019 interim dividend 2 Comprises regulatory deductions, principally goodwill, intangible assets and pension scheme surplus 12 Half-year results 2019

Su Summary mary Net income 1 -5% to £1,032.6m £m £m 1,086.1 Profit before tax and 1,032.6 exceptional items -14% to £340.4m Basic EPS before 397.1 exceptional items 340.4 -14% to 98.6p Interim dividend unchanged at H1 2018 H1 2019 H1 2018 H1 2019 35.0p Profit before tax and Net income 1 exceptional items 1 Before exceptional items. 13 Half-year results 2019

Peter Harrison Group Chief Executive

Dev evel elopment opments s to rei einforce force long-term term strategy rategy Closer proximity Expand Grow Private to consumer core business Assets & Alternatives Real Estate: Thirdrock Scottish Widows mandate Blue Asset Management Impact investing: Progress in China Schroders Personal Wealth BlueOrchard 15 Half-year results 2019

Ou Outlook look Focused strategy for long-term growth Progress against strategic objectives to drive future growth Strong pipeline despite environment of limited investor demand 16 Half-year results 2019

Forward Fo ward looking king statem atements ents 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. 17 Half-year results 2019