schroders 2020 half-year results · raising activity – net new business of £9.1bn, aum now...

30 July 2020

Peter Harrison

Group Chief Executive

Schroders

2020 Half-year Results

1Before exceptional items.

Resilient results in a challenging period

H1 2020 H1 2019 Change

Net income1 £1,003.9m £1,032.6m (3)%

Ratio of total costs to net income 70% 67% –

Profit before tax1 £306.2m £340.4m (10)%

AUM £525.8bn £444.4bn 18%

Net new business £38.1bn £(1.2)bn –

Basic EPS1 85.8p 98.6p (13)%

Total dividend per share 35p 35p –

Diversified business model performing well

Over £38bn net inflows, led by Solutions and Wealth Management

Productivity high through transition to remote working

Actively supporting companies and communities

2

65.745.3

175.2

94.1

145.5

0

50

100

150

200

£bn

Wealth Management

Private Assets & Alternatives

Solutions Mutual Funds Institutional

Strategically-aligned view of the business

3

Asse

ts u

nder

man

agem

ent(

£bn)

65.745.3

175.2

94.1

145.5

0

50

100

150

200

£bn

Wealth Management


Solutions Mutual Funds Institutional

54% of total AUM

Growth in business areas of strategic focus

4

£bn

(5)

0

5

10

15

2016 2017 2018 2019 H1 2020

Historic net new business

0 0.2 0.4 0.6 0.8 1

Schroders Personal Wealth

Benchmark Capital

Cazenove Capital

H1 2020 net new business

£bn

Continued strong momentum in Wealth Management

Strong investment performance£1.3bn of net inflows, led by Cazenove and Benchmark

5

Offset by outflows in liquid alternatives: EMD absolute return, GAIA range

Inflows in Private Assets: Real Estate, Private Equity, Infrastructure

Good progress on fund raisings, despite challenging backdrop

Real Estate strengthened by acquisition of Pamfleet

£bn

(1)

0

1

2

3

2016 2017 2018 2019 H1 2020



6

First half saw remainder of Scottish Widows and large US mandate funded

Continued client demand for risk controlled growth and LDI strategies

Now one third of group AUM

(5)

0

5

10

15

20

25

30

35

40

45

2016 2017 2018 2019 H1 2020


£bn

Ongoing demand for Solutions strategies

7

£bn

(6)

(4)

(2)

0

2

4

6

8

2016 2017 2018 2019 H1 2020

£bn

(16)(14)(12)(10)

(8)(6)(4)(2)

0

2016 2017 2018 2019 H1 2020

Mutual Funds historic net new business Institutional historic net new business

Mutual Funds and Institutional

Challenging backdrop for raising assets in ‘traditional’ business areas

8

£bn

– Inflows into Private Assets (Real Estate, Private Equity, Infrastructure)

– Outflows from more liquid alternatives

Private Assets

– ‘Risk off’ across investment desks

– Partially offset by £1.7bn into Global equitiesEquities

– Continued momentum into Solutions

– Demand for risk-controlled growth and LDI mandates

Multi-asset

– Rotation into Fixed Income

– Institutional demand for US & Global bonds, retail flows into European credit

Fixed Income

Net flows by asset class

(10) 0 10 20 30 40 50

Equities


Fixed Income

Multi-asset

9

Strong investment performance in equity and fixed income

£bn (10) 0 10 20 30 40

Asia Pacific

EMEA

Americas

UK

– ‘Risk off’ across region

– Outflows led by outflows from Australia, partly offset by positive inflows in China

Asia Pacific

– ‘Risk off’ across region for mutual funds

– Most countries in net outflows, Iberia the exception

EMEA

– Flows driven by Solutions

– Private Assets and Institutional business areas also net positive

UK

– Strong flows driven by Solutions mandate

– £0.5bn net inflows into Latin America

Americas

Net flows by region

10

– Continued strong performance

– Highly successful fund raising activity

– Net new business of £9.1bn, AUM now almost £70bn

Joint Ventures & Associates

BoComSchroders

Axis Asset Management

11

SchrodersPersonal Wealth

– Growing market share, now c.5.6%

– Net new business of £2.1bn, AUM over £15bn

– AUM ranking now 8th

overall, 4th in equities

– Challenging period for raising new assets through lockdown

– Process to replatformclients on schedule

– Strong long-term outlook

30 July 2020

Richard Keers

Chief Financial Officer

Schroders

2020 Half-year Results

H1 2019 H1 2020

Profit before tax and

exceptional items 340.4

£m

H1 2020

Profit before tax and after

exceptional items 280.1

Net income(28.7)

Compensationcosts3.2

Non-compensation costs(8.7)

Exceptionalitems(26.1)

Profit aftertax

222.7

Profit before tax and exceptional items -10% to £306.2m

Profit before tax and exceptional items

Profit before tax and exceptional

items306.2

Profit before tax and exceptional items

13

Net income -3% to £1,004m

Profit before tax and exceptional itemsNet income

H1 2019 H1 2020 H1 2020Group Asset Management Wealth Management

Group net income

1,004

SPW Adjustment

(25)

Segmentalnet income

1,029

Segmental net income

1,033

Associates and

Joint ventures*6

Markets, FX and mix

(25)

Net new business

20Acquisitions

20

187

£m

144

Performance fees and net carried

interest(8)

Other income

(17)

865 836

*Excludes SPW, which is proportionally consolidated.

14

0

20

40

60

80

100

0

2

4

6

8

10

12

14

Q1 Q2 Q3 Q4 Q1 Q2

Net new businessAnnualised net new revenue 2019 - 2020

109.3130.3

149.9

18.3

19.3

21.4

12.7

11.3

8.6

0.1

0.80.5

140.4

161.7*

0

40

80

120

160

200

H1 2019 H2 2019 H1 2020Management fees Transaction feesNet banking interest income Performance fees

Wealth Management net operating revenue

180.4*

Wealth Management net operating revenue

1Excluding performance fees.*Includes £28.7m H1 2020 (£12.8m H2 2019) relating to the proportional consolidation of SPW.

ANNR£m

NNB£bn

£m

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

2019 2020

15

Net operating revenue margin1

57bpsH1 2019: 60bps

Average AUM

£63.4bnH1 2019: £46.9bn

(100)

(75)

(50)

(25)

0

25

50

75

100

(40)

(30)

(20)

(10)

0

10

20

30

40

Q1 Q2 Q3 Q4 Q1 Q2


825.6 865.3 801.5

27.3 44.918.4

0

200

400

600

800

1,000

H1 2019 H2 2019 H1 2020

Performance fees and net carried interest

852.9 819.9

Closing AUM

£460.1bnH1 2019: £393.7bn

Asset Managementnet operating revenue

910.2

Asset Management net operating revenue

ANNR£m

NNB£bn

£m


2019 2020

Net new business

£36.8bnH1 2019: outflows of £2.1bn

16

(12)

(6)

0

6

12

18

24

30

(2)

(1)

0

1

2

3

4

5

Q1 Q2 Q3 Q4 Q1 Q2


5.6

13.8

0.225.4

3.91.4

148.3 151.9141.6

0

40

80

120

160

H1 2019 H2 2019 H1 2020

Performance fees and net carried interestReal estate transaction fees

140.4117.3

1Excluding performance fees, net carried interest and real estate transaction fees.


63bpsH1 2019: 63bps

Average AUM

£44.3bnH1 2019: £37.6bn

Private Assets & Alternatives net operating revenue

134.1

Private Assets & Alternatives net operating revenue

ANNR£m

NNB£bn

£m


2019 2020

17

(10)

0

10

20

30

40

(10)

0

10

20

30

40

Q1 Q2 Q3 Q4 Q1 Q2


2019 2020

ANNR£m

NNB£bn

109.9116.2

121.0

0

20

40

60

80

100

120

140

H1 2019 H2 2019 H1 2020

£mNet operating revenue margin

15bpsH1 2019: 22bps

Average AUM

£162.1bnH1 2019: £100.2bn

SolutionsSolutions


18

(60)

(40)

(20)

0

20

40

60

(6)

(4)

(2)

0

2

4

6

Q1 Q2 Q3 Q4 Q1 Q2


NNB£bn

ANNR£m

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

(70)

(50)

(30)

(10)

10

30

50

70

(6)

(4)

(2)

0

2

4

6

Q1 Q2 Q3 Q4 Q1 Q2


2019 2020

NNB£bn

ANNR£m

Mutual FundsNet new business and annualised net new revenue(NNB and ANNR)Mutual Funds


71bpsH1 2019: 74bps

InstitutionalNet operating revenue margin1

31bpsH1 2019: 33bps

1Excluding performance fees.

Mutual Funds and InstitutionalMutual Funds and Institutional

2019 2020

19




Group net income

1,004

SPW Adjustment

(25)

Segmentalnet income

1,029


1,033

Associates and joint ventures*

6Markets, FX and

mix(25)

Net new business

20

Acquisitions20

187

£m

144

Performance fees and

net carried interest

(8)

Other income

(17)

865 836


20

H1 2020 H1 2019

SPW1 BoCom Axis Other Total Total

Group's share of profit (£m)2 7.2 16.9 2.6 0.9 27.6 14.1

NNB (£bn) 9.1 2.1 0.1 11.3 1.3

AUM (£bn) 68.7 15.3 1.0 85.0 63.4

Share of profit of associates and joint ventures2

+96%to

£27.6m

Associates and Joint VenturesAssociates and Joint Ventures

1SPW’s AUM is managed by the Group and included in the Group’s AUM.2Before exceptional items.

21

H1 2020 H1 2019 % Movement

Profit (£m) 56.3 33.7

Group's share of profit (£m) 16.9 10.1 +67%

NNB (£bn) 9.1 (1.0)

Margin 28.8 21.8

AUM (£bn) 68.7 51.1 +3%

2020 Record net inflows of

+£9bn

Associates and Joint VentJVsBoCom Schroders joint venture

Share of profit

+150%Since H1 2015

22




Group net income

1,004

SPW Adjustment

(25)

Segmentalnet income

1,029


1,033

Associates and joint

ventures*6

Markets, FX and mix(25)

Net new business

20Acquisitions

20

187

£m

144

Performance fees and

net carried interest

(8)

Other income

(17)

865 836


23

307.7346.6

410.8 433.1 441.8

10.2

10.3

9.4

10.611.2

9

10

11

12

2015 2016 2017 2018 2019 H1 2020Annualised

0

100

200

300

400

500

600

Average AUM Non-Compensation costs as bps of average AUM

501.2

£bn bps

Non-compensation costsOperating expenses

Total compensation ratio 45% H1 2019: 44% Ratio of total cost to net income 70% H1 2019: 67%

453.4 450.2

238.8 247.5

0

200

400

600

800

H1 2019 H1 2020

722.9

£m

19.1

Compensation costs Non-compensation costs

25.2711.3

Exceptional items

24

9.9

1Final 2019 dividend/proposed 2020 interim dividend.2Comprises items that are inadmissible for regulatory purposes, principally goodwill, intangible assets and pension scheme surplus.

Composition of Group Capital

1,498 1,525

148 97 408 318 578 621

1,216 1,363

0

1,000

2,000

3,000

4,000

31 December 2019 30 June 2020

3,848 3,924

Working capital – regulatory and other Working capital – seed and co-investment

Investment capital – liquid Investment capital – illiquid Other items2

1,498 1,525

1,127 1,100

216 96

1,007 1,203

0

1,000

2,000

3,000

4,000

31 December 2019 30 June 2020

3,9243,848

£m

Overall regulatory capital requirement Other items2Dividend1Capital surplus

Capital base Capital allocation

25

1Before exceptional items.

Summary

1,032.6 1,003.9

340.4 306.2

Profit before tax1Net income1

H1 2019 H1 2020H1 2019 H1 2020

£mProfit after tax

- 13% to £222.7m

Ratio of total coststo net income1

70%

Basic EPS1

- 13% to 85.8p

Interim dividend

unchanged at 35.0p

26

First half dominated by social and economic impacts of Covid, considerable uncertainty remains

Retain focus on repositioning business towards high quality,high longevity areas

Focused strategy, global footprint and diversified business model to deliver long-term value for clients and shareholders

Continue to invest forlong-term growth of the business

Diversified business model proving resilient

Outlook for H2 2020 and beyond

27

Forward looking statement

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.

schroders 2020 half-year results · raising activity – net new business of £9.1bn, aum now...

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