Schroders Plc · LSE:SDR
Schroders — H1 2020 Earnings Presentation
28 slides from Schroders's earnings presentation, Jul 30, 2020
Slide 1: Schroders 2020 Half-year Results
Schroders 2020 Half-year Results Peter Harrison Group Chief Executive 30 July 2020
Slide 2: Resilient results in a challenging period
Resilient results in a challenging period Diversified business model performing well H1 2020 H1 2019 Change Net income1 £1,003.9m £1,032.6m (3)% Over £38bn net inflows, led by Solutions and Ratio of total costs to net income 70% 67% – Wealth Management Profit before tax1 £306.2m £340.4m (10)% Produc
Slide 3: Strategically-aligned view of the business
Strategically-aligned view of the business Wealth Private Assets & Solutions Mutual Funds Institutional Management Alternatives £bn Assets under management (£bn) 200 175.2 145.5 150 100 94.1 65.7 45.3 50 0 3
Slide 4: Growth in business areas of strategic focus
Growth in business areas of strategic focus Wealth Private Assets & Solutions Mutual Funds Institutional Management Alternatives £bn 54% of total AUM 200 175.2 145.5 150 100 94.1 65.7 45.3 50 0 4
Slide 5: Continued strong momentum in Wealth Management
Continued strong momentum in Wealth Management £1.3bn of net inflows, led by Strong investment performance Cazenove and Benchmark Historic net new business H1 2020 net new business £bn 15 Cazenove Capital 10 Benchmark Capital 5 0 Schroders Personal Wealth (5) £bn 0 0.2 0.4 0.6 0.8 1 2016 2017 2018 2
Slide 6: Private Assets & Alternatives
Private Assets & Alternatives Historic net new business Inflows in Private Assets: Real Estate, Private Equity, £bn Infrastructure 3 Offset by outflows in liquid 2 alternatives: EMD absolute return, GAIA range 1 Good progress on fund raisings, despite challenging backdrop 0 Real Estate strengthened
Slide 7: Ongoing demand for Solutions strategies
Ongoing demand for Solutions strategies Historic net new business £bn 45 Continued client demand for risk controlled growth and 40 LDI strategies 35 30 First half saw remainder of 25 Scottish Widows and large 20 US mandate funded 15 10 Now one third of 5 group AUM 0 (5) 2016 2017 2018 2019 H1 2020 7
Slide 8: Mutual Funds and Institutional
Mutual Funds and Institutional Challenging backdrop for raising assets in ‘traditional’ business areas Mutual Funds historic net new business Institutional historic net new business £bn £bn 8 0 6 (2) 4 (4) (6) 2 (8) 0 (10) (2) (12) (4) (14) (6) (16) 2016 2017 2018 2019 H1 2020 2016 2017 2018 2019 H1
Slide 9: Net flows by asset class
Net flows by asset class Strong investment performance in equity and fixed income – Continued momentum into Solutions Multi-asset Multi-asset – Demand for risk-controlled growth and LDI mandates Fixed – Rotation into Fixed Income Fixed Income – Institutional demand for US & Global bonds, Income reta
Slide 10: Net flows by region
Net flows by region – Flows driven by Solutions UK – Private Assets and Institutional UK business areas also net positive – Strong flows driven by Solutions Americas Americas mandate – £0.5bn net inflows into Latin America EMEA – ‘Risk off’ across region for EMEA mutual funds – Most countries in net
Slide 11: Joint Ventures & Associates
Joint Ventures & Associates BoCom Axis Asset Schroders Schroders Management Personal Wealth – Continued strong – Growing market share, – Challenging period for performance now c.5.6% raising new assets through lockdown – Highly successful fund – Net new business of raising activity £2.1bn, AUM over
Slide 12: Schroders 2020 Half-year Results
Schroders 2020 Half-year Results Richard Keers Chief Financial Officer 30 July 2020
Slide 13: Profit before tax and exceptional items
Profit before tax and Profit before tax and exceptional items exceptional items £m Profit before tax and Profit before tax Net income Compensation Non-compensation Exceptional Profit before exceptional items and exceptional (28.7) costs costs items tax and after 340.4 items 3.2 (8.7) (26.1) exceptio
Slide 14: Net income -3% to £1,004m
Profit before tax and Net income exceptional items £m Performance fees Associates Markets, FX Net new and net carried and Other SPW Segmental Segmental Group net income and mix business interest Acquisitions Joint ventures* income net income Adjustment net income 1,033 (25) 20 (8) 20 6 (17) 1,029 (2
Slide 15: Wealth Management net operating revenue
Wealth Management Wealth Management net operating revenue net operating revenue Net operating revenue Net new business and annualised net new revenue (NNB and ANNR) £m NNB ANNR Net operating £m 200 £bn revenue margin1 180.4* 57bps 161.7* 8.6 0.5 14 160 0.8 100 11.3 21.4 12 140.4 12.7 0.1 19.3 10 80
Slide 16: Asset Management net operating revenue
Asset Management Asset Management net operating revenue net operating revenue Net operating revenue Net new business and annualised net new revenue (NNB and ANNR) £m NNB ANNR Closing AUM £bn £m 1,000 910.2 £460.1bn 800 852.9 27.3 44.9 819.9 18.4 40 30 20 100 75 50 H1 2019: £393.7bn 600 10 25 0 0 400
Slide 17: Private Assets & Alternatives net operating revenue
Private Assets & Alternatives Private Assets & Alternatives net operating revenue net operating revenue Net operating revenue Net new business and annualised net new revenue (NNB and ANNR) £m ANNR NNB Net operating £bn £m revenue margin1 160 148.3 151.9 3.9 141.6 5 30 63bps 13.8 1.4 25.4 4 24 0.2 12
Slide 18: Solutions
Solutions Net operating revenue Net new business and annualised net new revenue (NNB and ANNR) Net operating £m NNB ANNR £bn £m revenue margin 140 15bps 40 40 121.0 120 116.2 30 30 109.9 H1 2019: 22bps 100 20 20 80 10 10 60 0 0 Average AUM £162.1bn 40 (10) (10) Q1 Q2 Q3 Q4 Q1 Q2 20 H1 2019: £100.2bn
Slide 19: Mutual Funds and Institutional
Mutual Funds and Institutional Mutual Funds Institutional Net new business and annualised net new revenue Net new business and annualised net new revenue Mutual Funds (NNB and ANNR) (NNB and ANNR) Net operating revenue NNB ANNR NNB ANNR margin1 £bn £m £bn £m 71bps H1 2019: 74bps 6 4 70 50 30 6 4 60
Slide 20: Net income -3% to £1,004m
Profit before tax and Net income exceptional items £m Performance Associates fees and and joint Other Segmental Segmental Markets, FX and net carried SPW Net new Acquisitions ventures* income net income Group net income mix business interest Adjustment net income (8) 20 6 (17) 1,029 1,033 (25) 20 (2
Slide 21: Associates and Joint Ventures
Associates and Joint Ventures H1 2020 H1 2019 SPW1 BoCom Axis Other Total Total Share of profit of associates and joint ventures2 Group's share of profit (£m)2 7.2 16.9 2.6 0.9 27.6 14.1 +96% NNB (£bn) 9.1 2.1 0.1 11.3 1.3 to £27.6m AUM (£bn) 68.7 15.3 1.0 85.0 63.4 1SPW’s AUM is managed by the Grou
Slide 22: BoCom Schroders
BoCom Schroders Associates joint and Joint venture VentJVs % H1 2020 H1 2019 Movement 2020 Record net inflows of Profit (£m) 56.3 33.7 +£9bn Group's share of profit (£m) 16.9 10.1 +67% NNB (£bn) 9.1 (1.0) Share of profit Margin 28.8 21.8 +150% AUM (£bn) 68.7 51.1 +3% Since H1 2015 22
Slide 23: Net income -3% to £1,004m
Profit before tax and Net income exceptional items £m Performance fees and Associates Other net carried Segmental SPW Segmental Markets, FX and Net new and joint income Group interest net income Adjustment net income mix business Acquisitions ventures* net income (25) (8) 6 (17) 1,029 (25) 1,033 20
Slide 24: Operating expenses
Operating expensescosts Non-compensation £m £bn bps 800 600 12 711.3 722.9 19.1 25.2 501.2 500 433.1 441.8 600 410.8 238.8 247.5 400 346.6 11.2 11 307.7 10.6 400 300 10.3 9.9 200 10.2 10 200 453.4 450.2 9.4 100 0 9 0 2015 2016 2017 2018 2019 H1 2020 H1 2019 H1 2020 Annualised Compensation costs Non-
Slide 25: Composition of Group Capital
Composition of Group Capital Capital base Capital allocation £m 3,848 3,924 3,848 3,924 4,000 4,000 1,007 1,203 1,216 1,363 3,000 3,000 216 96 578 621 2,000 1,127 1,100 2,000 408 318 148 97 1,000 1,000 1,498 1,525 1,498 1,525 0 0 31 December 2019 30 June 2020 31 December 2019 30 June 2020 Working ca
Slide 26: Summary
Summary £m Profit after tax - 13% to £222.7m Ratio of total costs to net income1 70% 1,032.6 1,003.9 Basic EPS1 340.4 306.2 - 13% to 85.8p H1 2019 H1 2020 H1 2019 H1 2020 Interim dividend unchanged at 35.0p Net income1 Profit before tax1 1Before exceptional items. 26
Slide 27: Outlook for H2 2020 and beyond
Outlook for H2 2020 and beyond Diversified business model proving resilient First half dominated by social and Retain focus on repositioning Continue to invest for economic impacts of Covid, business towards high quality, long-term growth of considerable uncertainty remains high longevity areas the
Slide 28: Forward looking statement
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