Slide 1: Annual results 2018
Annual results 2018 Presentation 7 March 2019 Peter Harrison Group Chief Executive
Slide 2: Resilient results with strategic progress
Resilient results with strategic progress Peter Harrison Group Chief Executive Year of strategically Revenue growth while critical initiatives investing back into the business Growth in key areas Business model evolving of investment to meet changing client demand 1 Annual Results 2018
Slide 3: 2018 key financial results summary
2018 2017 Change Net income1 £2,123.9m £2,068.9m 3% Ratio of total costs to net income 64% 61% – Profit before tax1 £761.2m £800.3m (5)% AUMA £421.4bn £447.0bn (6)% Net new business £(9.5)bn £9.6bn – Basic EPS1 215.8p 226.9p (5)% Total dividend per share 114p 113p – Peter Harrison Group Chief Execut
Slide 4: Pre-exceptional profit before tax
Pre-exceptional profit before tax (£m) 800 700 600 500 400 300 200 100 0 2012 2013 2014 2015 2016 2017 2018 Peter Harrison Group Chief Executive Year of strategically Revenue growth while critical initiatives investing back into the business Growth in key areas Business model evolving of investment
Slide 5: Net flows by channel
Net flows by channel Section 1 £bn 15 10 5 0 (5) (10) (15) 2013 2014¹ 2015 2016 2017 2018 Institutional Intermediary Wealth Management 1Excludes Friends Life mandate win of £12bn in December 2014. Weaker markets impacting client demand ‘Risk off’ across Institutional flows Wealth Management Intermed
Slide 6: Net flows by region
Net flows by region Section 1 Record inflows in Small outflows in North America Latin America £bn 4 2 Positive UK flows UK Institutional led 0 led by Wealth by £5.5bn Multi-asset net flows (2) (4) Challenging markets Institutional demand across channels and (6) for Private Assets countries in Europe
Slide 7: Net flows by asset class
Net flows by asset class Section 1 Demand from UK and Ongoing demand for Asia Pacific Institutional Multi-asset solutions clients £bn Diversified across 6 £2.3bn net flows in strategies, led by Private Private Assets, all 4 Equity and Securitised regions net positive Credit 2 0 Continued turnaround
Slide 8: Richard Keers, Chief Financial Officer
Richard Keers Chief Financial Officer
Slide 9: Profit before tax and exceptional items
Profit before tax and exceptional items £m Profit before tax and Net income Compensation costs Non-compensation Profit before tax and exceptional items costs exceptional items 800.3 55.0 Exceptional items (22.0) (72.1) 761.2 90.3 Wealth Wealth 93.4 (111.3) Management Management Asset Asset Managemen
Slide 10: Net income
Net income Net operating revenue £m +£61m Performance fees and Markets and FX carried interest +£0m -£24m Other operating Carried Performance Other Net new interest fees income revenue Net income Net income Markets FX business 28 (52) 44 (6) 2,124 2,069 28 (28) 41 Acquisitions Wealth 290 273 +£72m M
Slide 11: Net operating revenue
Net operating revenue Net new business and annualised net new revenue (NNB and ANNR) £m NNB ANNR 2,070.7 £bn Net new business Annualised net new revenue 2017 - 2018 £m 2,010.2 28.4 10 90 2,000 78.4 26.6 8 1,712.8 60 41.2 6 1,500 4 30 2 0 0 1,000 1,931.8 2,015.7 (2) 1,671.6 (30) (4) 500 (6) (60) (8)
Slide 12: Wealth Management net operating revenue
Wealth Management net operating revenue Net new business and annualised net new revenue £m (NNB and ANNR) 300 281.9 NNB ANNR 266.9 0.4 £bn Net new business Annualised net new revenue 2017 - 2018 £m 0.9 26.8 250 21.4 1.6 16 223.3 38.5 1.4 14 2.4 40.8 20.6 1.2 12 200 38.8 1.0 10 150 0.8 8 0.6 6 203.8
Slide 13: Intermediary net operating revenue
Intermediary net operating revenue Net new business and annualised net new revenue (NNB and ANNR) £m NNB ANNR £bn Net new business Annualised net new revenue 2017 - 2018 £m 1,000 929.3 937.5 0.7 8 60 19.9 797.0 6 800 11.6 40 4 20 600 2 0 0 909.4 936.8 400 785.4 (2) (20) (4) 200 (40) (6) (8) (60) 0 Q
Slide 14: Institutional net operating revenue
Institutional net operating revenue Net new business and annualised net new revenue (NNB and ANNR) £m NNB ANNR 1,000 £bn Net new business Annualised net new revenue 2017 - 2018 £m 851.3 8 20 372.8 814.0 28.4 800 6 15 692.5 57.6 25.5 4 10 27.2 600 2 5 0 0 400 756.4 797.4 (2) (5) 665.3 (4) (10) 200 (6
Slide 15: Carried interest
Carried interest Net carried interest £28.4m Return Represents 1% of net operating revenue Total return 74 Investment vehicles with carried interest arrangements Preferred 9 34 return Investment vehicles Investment vehicles (‘hurdle’) have recognised contributing to the cost of carried interest fina
Slide 16: Operating expenses
Operating expenses 43% £m Total 1,600 compensation 1,460.2 97.5 ratio 2017: 43% 1,400 1,303.4 34.8 1,200 459.4 387.3 1,000 800 [X] 1,362.7 600 1,268.6 881.3 903.3 64% 400 Ratio of total 200 cost to net income 2017: 61% 0 2017 2018 Compensation costs Non-compensation costs Exceptional items 15 Annual
Slide 17: Group Capital
Group Capital £m 4,000 4,000 3,621 3,621 3,471 3,471 3,000 1,164 1,090 1,341 3,000 1,165 216 Working capital – Other Capital surplus 216 392 2,000 535 2,000 Working capital – Seed 944 1,126 696 Dividend¹ 465 and co-investment 147 165 Investment capital – Liquid 1,000 1,000 Overall regulatory 1,146 1
Slide 18: Summary
Summary Net income1 +3% to £2,123.9m £m Ratio of total costs to net income 2,123.9 2,068.9 64% Profit before tax and exceptional items -5% to £761.2m 800.3 761.2 Basic EPS before exceptional items -5% to 215.8p 2017 2018 2017 2018 Total dividend Net income1 1Before exceptional items. Profit before t
Slide 19: Peter Harrison, Group Chief Executive
Peter Harrison Group Chief Executive
Slide 20: Investing for growth – seven key areas
Investing for growth – seven key areas Product innovation Fixed Income and North Asia Technology Private Assets & Wealth and Solutions Multi-asset America Pacific Alternatives Management – Increase seed – Scottish Widows mandate – US & Canada Instl. – China – Alpha generation – Alternative Sales Uni
Slide 21: Investing for growth – seven key areas
Investing for growth – seven key areas Expand core business Target client longevity Product innovation Fixed Income and North Asia Technology Private Assets & Wealth and Solutions Multi-asset America Pacific Alternatives Management – Increase seed – Scottish Widows mandate – US & Canada Instl. – Chi
Slide 22: Investing for growth – seven key areas
Investing for growth – seven key areas Closer proximity Expand to consumer core business Grow Wealth offering Target client longevity Product innovation Fixed Income and North Asia Technology Private Assets & Wealth and Solutions Multi-asset America Pacific Alternatives Management – Increase seed –
Slide 23: Investing for growth – seven key areas
Investing for growth – seven key areas Closer proximity Expand Grow Private to consumer core business Assets and Alternatives Grow Wealth offering Rebalance business towards Target client longevity private markets Product innovation Fixed Income and North Asia Technology Private Assets & Wealth and
Slide 24: Investing for growth – seven key areas
Investing for growth – seven key areas Closer proximity Expand Grow Private to consumer core business Assets and Alternatives Grow Wealth offering Rebalance business towards Target client longevity private markets Technology Product innovation Fixed Income and North Asia Technology Private Assets &
Slide 25: Investing for growth – seven key areas
= Lloyds joint venture = Maybank & Welnvest — Thirdrock = Benchmark Capital — Hartford r partnership a - C.Hoare & Co C9) Expand core business — Scottish Widows mandate Jt an — Solutions P — Growth in core markets — Increase seed capital - GAIA Helix & - Sustainability - Strategic capabilities — US
Slide 26: Outlook
Annual results 2018 Outlook Global footprint and diversified business model to drive future growth Peter Harrison Group Chief Executive Challenging market conditions but strong pipeline of new business We remain focused on strategy to reposition business for changing client demand 25 Annual Results
Slide 27: Thank you
Thank you 26 Annual Results 2018
Slide 28: Forward looking statements
Forward looking statements 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 the