Schroders Plc · LSE:SDR
Schroders — FY2023 Earnings Presentation
30 slides from Schroders's earnings presentation, Feb 29, 2024
Slide 1: Annual Results 2023
ANNUAL RESULTS 2023 29 February 2024 Peter Harrison Group Chief Executive Richard Oldfield Chief Financial Officer
Slide 2: Annual Results 2023
ANNUAL RESULTS 2023 29 February 2024 Peter Harrison Group Chief Executive
Slide 3: Strategic execution delivering positive flows despite industry headwinds
Strategic execution delivering positive flows despite industry headwinds Our strategic pivot means high quality growth areas now make up 56% of the Group’s AUM 3 NNB momentum into strategic growth areas has accelerated, up 92% to £23.4 billion Cost efficiency initiatives to enhance operating leverag
Slide 4: Executing on our strategic transformation
Executing on our strategic transformation Our strategic areas of focus have grown from 35% of … to 56% our AUM… of our AUM Operating revenue 2023 2016 contribution up from 4 31% in 2016 to £453.6bn 48% in 2023 £750.6bn Wealth Management Private Markets Solutions Public Markets Annual Results 2023
Slide 5: Resilient top line performance and strong cost discipline
Resilient top line performance and strong cost discipline Operating profit impacted by FX and share of profits from associates and JVs 2023 2022 Net operating revenue (£m) 2,334.4 2,361.4 Operating profit Net operating income (£m) 2,419.0 2,475.5 of £661.0m Operating expenses (£m) (1,758.0) (1,752.5
Slide 6: Strong discipline on cost management continues
Strong discipline on cost management continues Evolving our operating model to reshape for future growth Operating expenses £m Managing our cost base +0% 1,752.5 1,758.0 2023 operating expenses stable despite increased scale, acquisitions and 631.3 645.6 inflationary pressures 6 Continued focus on o
Slide 7: Strategic priorities driving growth
Strategic priorities driving growth Differentiated strategy to pivot to higher longevity areas AUM and CAGR by business area £bn 250 30% AUM reached new highs in: 228.3 237.7 Wealth Management, 200 Private Markets and Solutions 20% 150 AUM in our strategic growth 17% 16% areas has grown by a 7 13% C
Slide 8: Continued good outcomes for clients
Continued good outcomes for clients Three-year longevity Client investment performance Equities 80% 5.3 5.2 5.2 Fixed Income 89% 8 Multi Asset 48% 60% 77% Solutions 90% 4.7 4.6 Wealth Management 81% Private Markets 76% outperforming over 3 years outperforming over 5 years outperforming over 5 years1
Slide 9: Excellent Wealth Management performance
Excellent Wealth Management performance Servicing the whole of the wealth spectrum Wealth Management AUM Wealth Management cumulative NNB £bn £bn Strengthening 8% advised 140 50 10% CAGR 45 44.1 organic NNB growth rate 120 110.2 101.6 98.1 40 37.5 Operating profit up 16% 100 89.6 35 32.1 to £150.5m
Slide 10: Driving profitability in Schroders Personal Wealth
Driving profitability in Schroders Personal Wealth SPW’s client proposition ranked first on value proposition1 Good underlying growth: Future profitability driven by: – Increase buying efficiencies and reduce NNB rate advised front book: third party costs Change to investment – Bringing more of Schr
Slide 11: Growth in Schroders Capital despite challenging backdrop
Growth in Schroders Capital despite challenging backdrop Growth drivers underpinning shift to private markets remain strong Private Markets AUM development1 Private Markets cumulative NNB1 £bn £bn 80 25 4-year organic growth 22.7 70 16% 63.7 66.2 CAGR: 16% CAGR 20 60 18.3 A complete suite of private
Slide 12: Fundraising pillars delivering across Private Markets
Fundraising pillars delivering across Private Markets Private Markets fundraising and NNB Private Markets fundraising by pillar £bn £bn 10 9 1.6 £9.3bn (1.6) 1.1 8 raised in 2023 7 (4.8) 6 1.4 £4.0bn non-fee earning 5 4.8 dry powder to be deployed 12 9.3 4 3 2.0 +135 2 4.5 new clients 1 0 Competitiv
Slide 13: Solutions business chosen as trusted adviser to new clients
Solutions business chosen as trusted adviser to new clients NNB driven by LDI and OCIO wins Solutions AUM development1 Solutions cumulative NNB1 £bn £bn 300 100 89.9 4-year organic growth 11% 90 250 CAGR 80.5 77.9 77.9 CAGR: 7% 228.3 80 200.3 206.0 209.8 70 Achieved £12.0bn net 200 flows despite buy
Slide 14: Public Markets impacted by industry headwinds
Public Markets impacted by industry headwinds Resilient given wider market flows Mutual Funds NNB by region1 Institutional NNB by region1 £bn £bn Strong competition from APAC (2.3) APAC (1.0) MMFs and cash products Latin America (0.3) Latin America 0.2 Increasing share in mutual funds Positive contr
Slide 15: Moving forward
Moving forward Sustainability Employee proposition Innovation ‘A’ rated by CDP #1 ‒ top 2% of companies 6,700+ Employee Choice Launched industry 80+ distinct use for action and engagements with non-US firm Award in cases of our AI tool transparency on first LTAFs climate change investee companies in
Slide 16: Annual Results 2023
ANNUAL RESULTS 2023 29 February 2024 Richard Oldfield Chief Financial Officer
Slide 17: Results summary
Results summary Resilient results Strategic growth areas Net operating revenue 2023 2022 £m 1,200 Net operating revenue (£m) 2,334.4 2,361.4 +5% 1,115 1,058 1,000 Net operating income (£m) 2,419.0 2,475.5 394 423 800 Operating expenses (£m) (1,758.0) (1,752.5) 600 294 269 Operating profit (£m) 661.0
Slide 18: Net operating income
Net operating income Growth strategies largely offset adverse market impacts Net operating income bridge £m 2,475.5 26.4 13.4 (16.5) 2,500 (52.2) (29.5) 25.0 4% (23.1) 2,419.0 Average AUM decreased by due to markets and FX 2,300 406.8 Net operating revenue 436.8 NNB movement includes £10m 2,100 head
Slide 19: Wealth Management
Wealth Management Significant growth, now accounts for 23% of Group operating profit Net operating revenue £m 2022 318.1 39.3 36.9 394.3 Net operating revenue up by 7% 2023 327.5 32.4 63.3 423.2 Net operating revenue margin1 up 1bp 0 Management fees 100 200 Transaction, performance and other fees 30
Slide 20: Asset Management
Asset Management Strong growth in private markets business partly mitigated Public Market headwinds Net operating revenue by business area £m 2022 1 369.8 293.6 780.2 523.5 1,967.1 Public Markets average AUM reduced 2023 422.8 268.5 720.5 499.4 1,911.2 by 5% due to adverse markets, FX and net outflo
Slide 21: Interests in joint ventures and associates
Interests in joint ventures and associates Share of profits impacted by market sentiment in China Share of profit of joint ventures and associates1 2023 Asset Management Wealth Management Total Well positioned in China although Net operating income (£m) 447.6 129.7 577.3 near-term volatility meant s
Slide 22: Operating expenses
Operating expenses Expenses flat, benefitting from good cost discipline and one-off savings Total operating expenses £m 1,752.5 1,758.0 1,800 Operating expenses benefitting from recent investments made in operating 1,500 631.3 645.6 platform and one-off savings 1,200 Compensation costs down 1% , 22
Slide 23: Restructuring costs
Restructuring costs Cost efficiency initiatives, enabling reinvestment for future growth Total restructuring costs £m Proactively enabling investment for future growth through cost efficiency initiatives 24.3 £62m compensation-related 23 – Reposition capabilities for new skillsets 61.9 £24m other re
Slide 24: Group Capital composition
Group Capital composition Strong capital position, disciplined allocation Capital base Capital allocation £m 5,000 4,480 4,464 655 630 4,000 Organic investment for growth Dividends 233 233 – Continue to invest organically – Progressive and sustainable – Strategic investment in dividend 3,000 1,346 g
Slide 25: Profit before tax
Profit before tax Resilient results demonstrate benefits of strategy and positive cost management £m 2023 2022 Operating profit 661.0 723.0 Basic operating EPS 32.5p 2022: 37.4p Central costs (52.9) (48.8) Net gain/(loss) on financial instruments and interest income 55.7 (0.9) Basic EPS 24.6p 25 Acq
Slide 26: Outlook
Outlook
Slide 27: Well positioned for 2024 and beyond
Well positioned for 2024 and beyond Strategic growth Execution of our Drive future growth Our diversified areas now make up strategy has enabled us through enhanced business model 27 56% of AUM to deliver net inflows operating leverage will enable us to and growth from cost efficiency deliver for cl
Slide 28: Questions
Questions Peter Harrison Group Chief Executive Richard Oldfield Chief Financial Officer
Slide 29: Thank you
Thank you
Slide 30: 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