Schroders PLC · LSE:SDR
Schroders — Investor Presentation (January 2004)
28 slides from Schroders's investor presentation, January 2004
Slide 1: Schroder European Fund
Schroder Investments Limited Schroder European Fund January 2004 Representing Schroders: Adriaan de Mol van Otterloo, CFA SchEur+Alp311203
Slide 2: Market Outlook
Market Outlook 1 Market Outlook Markets will be supported by: -Companies deleveraging -Dividend yield support -Increase in corporate spending However: -Euro appreciation will badly impact exporters -Governments constrained on fiscal side and structural issues persist in some countries SchEur+Alp3112
Slide 3: Market Sentiment
Market Outlook 2 Market Sentiment March Now Germany Next Japan? Recovery play! Pricing power Deflationary risk Inflationary Pressures Balance sheet Right issues Warrant on the market Sentiment will always be a big swing factor in the market. Take advantage of it!! SchEur+Alp311203
Slide 4: Where Are We in the Cycle?
Market Outlook 3 Where Are We in the Cycle? Europe yoy EPS growth & trailing ROE (%) 60 18 50 16 40 30 14 20 10 12 0 10 -10 -20 8 -30 -40 6 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 Annual EPS growth ROE (rhs) Source: MSCI to December 03 Sc
Slide 5: In The Long Term
Market Outlook 4 In The Long Term Have we become too pessimistic? MSCI Europe, long-term estimated EPS growth rate % 17 16 15 14 13 12 11 10 9 8 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 Source: IBES, MSCI, Morgan Stanley Research to March 03 SchEur+Alp311203
Slide 6: Capital Expenditure
Market Outlook 5 Capital Expenditure Assets are growing older and older! % years 50 9 45 8 40 7 35 6 30 5 25 4 20 3 15 2 10 5 1 0 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003E 2004E Average age of tangible fixed assets(rhs) Depreciation / sales Capex / sales Source: C
Slide 7: Market Valuation
Market Outlook 6 Market Valuation Absolute support: income through dividends Europe Ex-UK: Bond yield v dividend yield 16 14 12 10 8 6 4 2 0 81 83 85 87 89 91 93 95 97 99 01 03 BY DY Source: MSCI, Thomson Datastream, Morgan Stanley research to June 03 SchEur+Alp311203
Slide 8: Earnings Momentum
Market Outlook 7 Earnings Momentum Upgrades are usually followed by outperformance Performance of best and worst earnings momentum (1995-2003) 160 140 120 100 80 60 40 94 95 96 97 98 99 00 01 02 03 Best eps momentum Worst eps momentum Source: IBES, Thomson Datastream, CSFB research to December 03 Sc
Slide 9: However not in 2003…
Market Outlook 8 However not in 2003….. Performance of best and worst earnings momentum (2003 YTD) 110 108 106 104 102 100 98 96 94 92 90 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Dec-03 Best earnings momentum Worst earnings momentum Source: IBES, Thomson Datastream, CSFB research to December 03 Sch
Slide 10: Schroder European Fund
Schroder European Fund SchEur+Alp311203
Slide 11: Fund - Key Points
Schroder European Fund - Key Points 10 Schroder European Fund Taking advantage of European opportunities Follows a highly structured investment process With Adriaan’s analytical background, fund takes a bottom-up approach with little emphasis on top-down strategies Backed by Schroders’ 25 Pan Europe
Slide 12: Calendar Year Performance
Schroder European Fund - Performance 11 Calendar Year Performance Schroder European Fund Quartile 29.7 2003 2003 1.9% 1 31.6 -27.0 2002 2002 2.0% 2 -25.0 -20.1 2001 2001 -6.2% 4 -26.3 1.7 2000 6.3 2000 4.6% 1 Since FM 23.4 Since FM Change 28.8 Change 5.4% 1 -40 -20 0 20 40 -9 -6 -3 0 3 6 9 Fund FT E
Slide 13: Calendar Year Performance
SWMF Europe ex UK Fund - Performance 12 Calendar Year Performance Schroder WMF Europe (ex UK) Equity Fund Quartile 16.7 1 2003 2003 5.7% 22.4 -33.1 1 2002 2002 7.2% -25.9 -19.5 2 2001 2001 2.3% -17.2 -0.9 2000 13.7 2000 14.6% 1 Since Launch -30.0 Since Launch (19/11/99) -2.2 27.8% 1 (19/11/99) -50 -
Slide 14: Sector Allocation
Schroder European Fund - Current Strategy 13 Sector Allocation Fund vs Index (%)* Cyclical Services Cyclical Services 6.1% Non Cyc Services Non Cyc Services 2.6% Non Cyc Consumer Non Cyc Consumer 1.6% Goods Goods Resources Resources 1.0% Utilities Utilities 0.4% Cyclical Consumer Cyclical Consumer -
Slide 15: Country Allocation
Schroder European Fund - Current Strategy 14 Country Allocation Fund vs Index (%)* Switzerland Switzerland 4.9% Belgium Belgium 4.2% Greece Greece 1.8% Norway Norway 1.6% Netherlands Netherlands 1.4% Ireland Ireland 1.1% Denmark Denmark 0.8% Iceland Iceland 0.3% Portugal Portugal 0.1% Austria Austri
Slide 16: Fund Positioning
Schroder European Fund - Current Strategy 15 Fund Positioning Schroder European Fund – Top 10 overweight and underweight stocks Top 10 Positive Load Differences at 31.12.03 Top 10 Negative Load Differences at 31.12.03 Load difference* Load difference* ING Groep 2.1 Siemens -1.4 GBL 1.4 Deutsche Bank
Slide 17: Schroder European Alpha Plus Fund
Schroder European Alpha Plus Fund SchEur+Alp311203
Slide 18: Fund Summary
Schroder European Alpha Plus Fund 17 Fund Summary — A new fund in the Schroder Unit Trust Range — Emphasis on bottom up stock picking using Schroders’ analytical resources and fund manager’s proven credentials — Fund launch date was 6 October 2003 SchEur+Alp311203
Slide 19: Investment Philosophy
Schroder European Alpha Plus Fund 18 Investment Philosophy The fund will invest in European companies with the aim to provide capital growth. This capital growth will be achieved by: — Focusing on Schroders’ stock picking capabilities — Being flexible to adapt to different market conditions — Having
Slide 20: Portfolio Characteristics
Schroder European Alpha Plus Fund 19 Portfolio Characteristics — Index unaware - broad sector and stock constraints — Between 40 and 80 stocks — Cash limit up to 10% under normal circumstances — No market capitalisation constraint — Ability to invest in fixed income up to 10% — Ability to use deriva
Slide 21: Investment Process
Schroder European Alpha Plus Fund 20 Investment Process — Focus on fundamental analysis — Emphasis on stock picking capabilities of fund managers and analysts Large Cap — Concentrate on companies rated 1 by analysts Small & Mid Cap — Close working relationship with Andy Brough’s small cap team — Con
Slide 22: What is Schroder European Alpha Plus Looking For?
Schroder European Alpha Plus Fund 21 What is Schroder European Alpha Plus Looking For? — Undervaluation versus its peer group or versus its own history — Restructuring cases — M&A activity — Ugly duck becomes a swan — Substantial discounts to Sum-of-the-Parts — High FCF generation relative to enterp
Slide 23: Adriaan’s Track Record
Appendix 22 Adriaan’s Track Record Since Adriaan’s Quartile Ranking 2000 2001 2002 2003 stewardship SWMF Europe ex UK Fund 1 1 1 1 1/16 Schroder European Fund na na 2 1 8/99 SISF Euro Active Value Fund na na 1 1 2/70 SISF Italian Equity Fund 1 1 1 1 6/21 Schroder European Alpha Plus Fund na na na 1
Slide 24: European Fund Vs European Alpha Plus Fund
Schroder European Alpha Plus Fund 23 European Fund Vs European Alpha Plus Fund European Fund European Alpha Plus Fund Fund Manager Adriaan de Mol van Otterloo Adriaan de Mol van Otterloo Benchmark FTSE Europe ex UK FTSE Europe ex UK Up to 10% for stock, sector or Tracking Error 3 - 8% country Fees 1
Slide 25: Royal Dutch: Dividend gives solid support
Current Strategy 24 Royal Dutch: Dividend gives solid support Royal Dutch 80 1.8 — Never lowered its dividend 70 — AAA rated debt 1.6 60 — Share price implies $16 of oil price 1.4 50 — Dividend yield 4.3% 40 1.2 30 1 20 0.8 10 0 0.6 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 20
Slide 26: Fluxys: Sleep Well
Current Strategy 25 Fluxys: Sleep Well Fluxys 1000 — Belgian national gas transmission company. 950 — High dividend yield, strong balance sheet 900 and extremely low valuation. 850 — Potential upside is large. 800 750 700 650 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-
Slide 27: Italmobiliare Sav: Discount on Discount on Discount
Current Strategy 26 Italmobiliare Sav: Discount on Discount on Discount Italmobiliare Sav 26 — Italian financial holding company. — Sav trade at approx. 40% discount to 24 Ords. 22 — Ords trade at approx. 40% discount to underlying operating assets. 20 — Operating assets trade at a large discount 18
Slide 28: Regulatory Requirements
27 Regulatory Requirements For professional advisers only, Past performance is not necessarily a guide to future performance. You should remember that the value of investments can go down as well as up and is not guaranteed. Exchange rate changes may cause the value of the overseas investments to ri