Slide 1: Schroders 2016 Half-Year Results
Schroders 2016 Half-Year Results 28 July 2016 Peter Harrison | Group Chief Executive
Slide 2: Good results in difficult markets
28/07/2016 08:28:18 H1 results Good results in difficult markets Net operating revenue of £794.9 million, despite challenging market conditions (H1 2015: £798.6 million) Profit before tax of £282.3 million (H1 2015: £290.3 million) Profit before tax and exceptional items £293.7 million (H1 201
Slide 3: Global diversification
28/07/2016 08:28:19 H1 results Global diversification £bn 16 22 Positive flows from UK and continental Europe, despite 14 20 political concerns 12 18 10 8 Asia Pacific outflows from Australia 6 4 2 Small Wealth Management redemptions 0 -2 -4 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2
Slide 4: Macro concerns subdue Intermediary demand
28/07/2016 08:28:19 H1 results Macro concerns subdue Intermediary demand £bn 6 Market volatility impacted global retail demand 5 4 3 2 Positive sales in Fixed Income 1 – European credit 0 -1 -2 Redemptions to risk assets -3 – Global & UK equities -4 – Multi-Asset Income -5 H1 2013 H2 2013 H1 2
Slide 5: Strong flows in Institutional
28/07/2016 08:28:20 H1 results Strong flows in Institutional £bn 12 18 Good levels of new business, driven by first quarter 16 10 8 14 6 Continued demand for Multi-asset and Fixed Income 4 2 De-risking and diversifying manager exposure led to 0 Equity outflows -2 -4 H1 2013 H2 2013 H1 2014 H2
Slide 6: Brexit: Well placed to respond to changing dynamics
28/07/2016 08:28:20 Brexit Well placed to respond to changing dynamics Globally diversified business Broad fund ranges in UK and Luxembourg Significant presence in Luxembourg and across Europe Net beneficiary of weaker sterling 5 2016 Half-Year Results | July 2016
Slide 7: Drivers of future growth
28/07/2016 08:28:21 Drivers of future growth Addressing structural headwinds Growth drivers Product Fixed North Asia Investing Wealth Private Innovation Income America Pacific in Management Assets and Technology and Solutions Alternatives 6 2016 Half-Year Results | July 2016
Slide 8: Product innovation and solutions
28/07/2016 08:28:21 Product innovation and solutions New Product function, distinct from Investment and Distribution Improving product innovation and client engagement Separation of Multi-asset investments and Portfolio solutions Broadening talent base and diversity 7 2016 Half-Year Results
Slide 9: Fixed Income
28/07/2016 08:28:21 Fixed Income Structural and regulatory growth drivers £12 billion of net new business from start of 2015 Success in Global and US aggregate strategies, European Credit Institutional opportunities in illiquid Fixed Income: – Safe Harbor – ABS/MBS 8 2016 Half-Year Results |
Slide 10: North America
28/07/2016 08:28:22 North America 48% of global investible assets Objective to reach 20% of group assets under management Strategic relationship with Hartford Funds 9 2016 Half-Year Results | July 2016
Slide 11: Asia Pacific
28/07/2016 08:28:22 Asia Pacific More than £17 billion net inflows since 2013 Market leading positions – Hong Kong – Singapore – Australia – Indonesia Structural drivers of growth 10 2016 Half-Year Results | July 2016
Slide 12: Investing in Technology
28/07/2016 08:28:22 Investing in Technology Further investment in data science – Investment insights from non-traditional data sources Driving efficiencies and insights through technology – Front office systems upgrade to Aladdin – Global Technology moving to agile working – Digital First initia
Slide 13: Wealth Management
28/07/2016 08:28:23 Wealth Management £34 billion AUM, 10% of group Largest wealth manager for charities in UK Provide family office services to more than 80 families 12 2016 Half-Year Results | July 2016
Slide 14: Private Assets & Alternatives
28/07/2016 08:28:23 Private Assets & Alternatives Strong growth and accelerating Good fee margins and longevity Initial steps already underway: – Real Estate – NEOS Business Finance – Insurance Linked Securities – Infrastructure Finance 13 2016 Half-Year Results | July 2016
Slide 15: Schroders 2016 Half-Year Results: Richard Keers, CFO
Schroders 2016 Half-Year Results 28 July 2016 Richard Keers | Chief Financial Officer
Slide 16: Financial highlights
28/07/2016 08:28:23 Financial highlights Net income, including performance fees (£m) Profit before tax (£m) 1,000 400 826.4 844.2 305.7 800 739.6 5.9 8.3 261.5 293.7 8.4 300 15.4 11.4 600 27.6 200 400 200 100 731.2 820.5 835.9 233.9 290.3 282.3 0 0 H1-14 H1-15 H1-16 H1-14 H1-15 H1-16 Performance fee
Slide 17: Net income
28/07/2016 08:28:23 Net income Net income up 2% to £844m £m Net gains on financial Net new business Net income Net income Markets instruments and other income 3 Associates and JVs 844 826 (33) 23 (2) Wealth Wealth Management Management FX Other 108 105 25 2 Net operating revenue Asset Asset Manageme
Slide 18: Currency profile of AUM
28/07/2016 08:28:23 Currency profile of AUM 72% in non-sterling currencies 6% 2% 2% 2% 2% 4% 32% 5% 5% 12% 28% USD* GBP EUR AUD JPY CNY TWD CHF KRW IDR Other *USD includes other currencies pegged to USD, including HKD. 17 2016 Half-Year Results | July 2016
Slide 19: Currency profile by segment and channel
28/07/2016 08:28:16 Currency profile by segment and channel 72% in non-sterling currencies Institutional £203.6bn Intermediary £106.4bn Wealth Management £33.8bn USD* 32% USD* 34% EUR 19% GBP 73% GBP 25% GBP 18% USD* 18% EUR 9% JPY 7% EUR 6% AUD 7% CNY 4% CHF 2% JPY 5% AUD 3% Other 1% CNY 4% IDR 3%
Slide 20: Institutional net operating revenue
28/07/2016 08:28:24 Institutional net operating revenue £m 500 Average AUM up £9 billion from H1 2015 450 400 350 319.7 316.1 309.0 Net operating revenue margin 32bps (FY 2015: 34bps) 300 5.6 20.6 6.1 250 200 150 303.4 299.1 310.0 Closing AUM at record high of £203.6 billion 100 50 0 H1 H2 H1
Slide 21: Intermediary net operating revenue
28/07/2016 08:28:24 Intermediary net operating revenue £m 500 Average AUM down £3 billion from H1 2015 450 383.9 380.8 400 371.7 0.3 9.2 0.3 350 Net operating revenue margin 74bps (FY 2015: 74bps) 300 250 200 383.6 371.6 371.4 150 Closing AUM at record high of £106.4 billion 100 50 0 H1 H2 H1
Slide 22: Wealth Management net operating revenue
28/07/2016 08:28:24 Wealth Management net operating revenue £m 120 Net banking interest up £2.5 million 105.7 107.1 101.6 1.9 100 7.4 0.6 9.9 8.1 20.2 15.8 18.5 80 Net operating revenue margin 65bps (FY 2015: 65bps) 60 40 78.1 77.1 76.8 Closing AUM at record high of £33.8 billion 20 0 H1 2015
Slide 23: Operating expenses
28/07/2016 08:28:24 Operating expenses Cost control in line with projections 2016 AM H1 2016 versus H1 £m H1 2015 H2 2015 & Group WM Total 2015 Compensation costs 365.9 368.1 335.1 49.9 385.0 +5% Non-compensation costs 154.8 160.0 140.2 25.3 165.5 +7% Operating expenses (excluding 520.7 528.1 475.3
Slide 24: Profit before tax and exceptional items
28/07/2016 08:28:25 Profit before tax and exceptional items £m Profit before tax Compensation and exceptional Net income costs Profit before tax 17.8 (19.1) Other costs items and exceptional (10.7) Tax 305.7 items 293.7 (61.4) Wealth Management Wealth Profit after tax and 30.0 Management before exce
Slide 25: Analysis of Group Capital
28/07/2016 08:28:25 Analysis of Group Capital Increase of £133m as at 30 June 2016 H1 H2 H1 £m 2015 2015 2016 Strong capital position Regulatory capital 695 653 687 Other operating capital 116 253 165 Continued investment in seed capital Investment capital* 957 942 1,070 Seed capital* 154 229 24
Slide 26: Summary and outlook
28/07/2016 08:28:25 Summary and outlook Market volatility likely to continue Schroders well positioned Diversified by client, asset class and geography Strategy to address industry headwinds 25 2016 Half-Year Results | July 2016
Slide 27: Forward looking statement
28/07/2016 08:28:26 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 unce