Slide 1: Annual results 2019
Annual results 2019 Presentation 5 March 2020 Peter Harrison Group Chief Executive
Slide 2: Delivering strategic progress
Delivering strategic progress Peter Harrison Group Chief Executive Record inflows across Progress across strategic initiatives both Asset and Wealth Management Targeted acquisitions to Greater granularity further reposition business in reporting 1
Slide 3: 2019 results key figures
2019 2018 Change Net income1 £2,124.8m £2,123.9m 0% Ratio of total costs to net income 67% 64% – Profit before tax1 £701.2m £761.2m (8)% AUM £500.2bn £407.2bn 23% Net new business £43.4bn £(9.5)bn – Basic EPS1 201.6p 215.8p (7)% Peter Harrison Total dividend per share 114p 114p – Group Chief Executi
Slide 4: Grow Asset Management
Grow Asset Management Closer relationships with end clients Expand Private Assets & Alternatives 1 Before exceptional items. 3
Slide 5: Strategically-aligned view of the business
Strategically-aligned view of the business Wealth Private Assets & Solutions Mutual Funds Institutional Management Alternatives Wealth Investment Provision of Branded Index-relative management opportunities complete mutual funds investment and financial available in solutions and provided components
Slide 6: Assets under management (£bn)
Strategically-aligned view of the business Wealth Private Assets & Solutions Mutual Funds Institutional Management Alternatives 150 142.8 144.1 Assets under management (£bn) 102.4 100 66.7 50 44.2 0
Slide 7: Changing composition of our assets
Changing composition of our assets 600 500 Now over Assets under management (£bn) 400 300 50% of AUM 200 100 0 2015 2016 2017 2018 2019 Institutional Mutual Funds Wealth Management Private Assets & Alternatives Solutions
Slide 8: Net operating revenue (£m)
Strategically-aligned view of the business Wealth Private Assets & Solutions Mutual Funds Institutional Management Alternatives 800 734.8 600 Net operating revenue (£m) 502.0 400 302.1 300.2 226.1 200 0
Slide 9: Net new business (£bn)
Strategically-aligned view of the business Wealth Private Assets & Solutions Mutual Funds Institutional Management Alternatives 40 34.5 30 Net new business (£bn) 20 14.7 10 2.8 0 (1.5) -10 (7.1)
Slide 10: Closer relationships with end clients through Wealth Management
5 year revenue CAGR of 8% Closer £bn 80 £bn £bn 20 relationships 70 60 15 with end clients 50 10 40 through Wealth 30 5 Management 20 10 0 0 -5 2015 2016 2017 2018 2019 AUM Cumulative net flows (rhs) Launch of Schroders Personal Acquisition of Wealth, £13.7bn AUM at year end ThirdRock in Singapore P
Slide 11: Expand Private Assets & Alternatives
Expand Private Assets & Alternatives £bn 5 year revenue CAGR of 16% £bn 4% 4% 1% 6% 50 10 34% 7% 40 8 7% 6 30 4 18% 20 19% 2 10 0 Real Estate Private Equity 0 -2 Sec. credit GAIA 2015 2016 2017 2018 2019 Impact investing EMD AR AUM Cumulative net flows (rhs) ILS Infra. Finance Commodities Ongoing de
Slide 12: Grow asset management through Solutions
Grow asset £bn 5 year revenue CAGR of 14% £bn management 160 140 50 40 through 120 100 30 Solutions 80 60 20 40 10 20 0 0 2015 2016 2017 2018 2019 AUM Cumulative net flows (rhs) Ongoing client demand for high Assets increased 114% and revenues longevity strategies by 90% in five years Over £45bn of
Slide 13: "Risk off" environment in Mutual Funds
“Risk off” £bn 5 year revenue CAGR of 5% £bn environment in 120 20 100 Mutual Funds 80 15 60 10 40 5 20 0 0 2015 2016 2017 2018 2019 AUM Cumulative net flows (rhs) Resilient performance in 2019 with Risk off backdrop at start of 2019 only £1.5bn of net outflows Redemptions from equity funds, Assets
Slide 14: Institutional business facing headwinds
Institutional £bn 5 year revenue CAGR of 3% £bn business 180 160 40 30 facing 140 120 20 headwinds 100 80 10 0 60 -10 40 20 -20 0 -30 2015 2016 2017 2018 2019 AUM Cumulative net flows (rhs) Incl. private assets and solutions 33% increase in AUM and 14% in Opportunities to expand revenues over five y
Slide 15: Repositioning towards higher longevity areas
Repositioning towards higher longevity areas Shift to higher longevity products reducing gross outflows Outflows as percentage of opening AUM 35% 30% 25% 20% 15% 2013 2014 2015 2016 2017 2018 2019
Slide 16: Net flows by asset class
Net flows by asset class – Diversified inflows across channels and desks Fixed Income Fixed Income – Strong demand for Global, European, US and EMD strategies – Positive flows into solutions Multi-asset Multi- – Demand for risk-controlled growth asset and LDI mandates Private Assets & – Further dive
Slide 17: Net flows by region
Net flows by region – Strong client demand in solutions UK UK – Uncertainty earlier in the year weighed on retail sentiment – Mutual fund demand led by key Asia Pacific Asia markets Pacific – Outflows from Australia and Japan EMEA – ‘Risk off’ across region for mutual funds EMEA – Demand for private
Slide 18: Richard Keers, Chief Financial Officer
Richard Keers Peter Harrison Chief GroupFinancial Officer Chief Executive
Slide 19: Profit before tax and exceptional items
Profit before tax and exceptional items £m Profit before tax and Compensation Profit before exceptional items Net income costs tax and exceptional Exceptional Non-compensation costs Profit before 761.2 0.9 (24.0) items items (36.9) tax and after 701.2 (76.6) 93.4 exceptional items 624.6 87.5 670.8 P
Slide 20: Development of average AUM
Development of average AUM £bn 500 490 480 470 460 FY-19 average AUM: £441.8bn 450 FY-18 average AUM: £433.1bn 440 430 420 410 400 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Average AUM AUM movement Average AUM Closing AUM of + 2% £500.2bn
Slide 21: Markets impact on average AUM
Markets impact on average AUM £bn 500 490 480 470 460 FY-19 average AUM: £443.0bn 450 FY-18 average AUM: £433.3bn 440 430 420 410 400 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Average AUM AUM movement Market impact + 2.2%
Slide 22: FX impact on average AUM
FX impact on average AUM £bn 500 500 490 490 480 480 470 470 460 460 FY-19 average AUM: £436.9bn 450 450 FY-18 average AUM: £434.1bn 440 440 430 430 420 420 410 410 400 400 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- 18 18 18 18 19 19 19 19 Average AUM AUM m
Slide 23: Net income up £0.9m to £2,125m
Net income £m Markets, FX and mix £7m Performance Associates fees and net SPW Group Net new and joint Other Segmental Adjustment Net income FX Mix carried interest income net income Markets business Acquisitions ventures* net income 11 2,124 14 (50) 18 8 2,125 43 (51) 21 9 2,136 290 310 1,801 1,781
Slide 24: Total net operating revenue
Total net operating revenue Net new business and annualised net new revenue (NNB and ANNR) £m NNB ANNR 2,070.7 £bn £m 2,250 2,010.2 2,065.2* 60 100 2,000 78.4 55.0 73.1 40 60 1,750 1,500 20 20 1,250 0 1,000 2,015.7 (20) 1,931.8 1,992.1 (20) 750 (60) (40) 500 250 (60) (100) 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 25: Wealth Management net operating revenue
Wealth Management net operating revenue Net operating revenue Net new business and annualised net new revenue £m (NNB and ANNR) 302.1* NNB ANNR 300 281.9 0.9 266.9 0.4 24.0 £bn £m 0.9 26.8 37.6 14 100 250 21.4 38.5 12 40.8 80 200 10 8 60 150 6 239.6 40 216.2 100 203.8 4 20 2 50 0 0 Q1 Q2 Q3 Q4 Q1 Q2
Slide 26: Asset Management net operating revenue
Asset Management net operating revenue NNB Net new business and annualised net new revenue ANNR Net operating revenue £bn (NNB and ANNR) £m £m 40 120 2,000 30 90 1,743.3 1,788.8 1,763.1 20 60 77.5 54.6 72.2 10 30 1,500 0 0 (10) (30) 1,000 (20) (60) 1,665.8 1,734.2 1,690.9 (30) (90) 500 (40) (120) Q1
Slide 27: Private Assets and Alternatives net operating revenue
Private Assets and Alternatives net operating revenue Net new business and annualised net new revenue NNB ANNR (NNB and ANNR) £bn £m £m Net operating revenue 5 30 400 4 24 273.7 300.2 3 18 300 29.3 2 12 31.8 19.4 6.1 1 6 200 0 0 235.8 251.5 (1) (6) 100 (2) (12) 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2019 20
Slide 28: Solutions net operating revenue
Solutions NNB Net new business and annualised net new revenue ANNR Net operating revenue £bn (NNB and ANNR) £m £m 250 226.1 40 40 219.3 30 30 200 20 20 150 10 10 100 0 0 50 (10) (10) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0 2018 2019 2018 2019 Net new business Annualised net new revenue 2018 - 2019 Net operating A
Slide 29: 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 NNB (NNB and ANNR) ANNR NNB (NNB and ANNR) ANNR £bn £m £bn £m 10 55 10 80 35 60 6 6 40 15 20 2 2 (5) 0 (2) (2) (20) (25) (40) (6) (45) (6) (60) (1
Slide 30: Net income up £0.9m to £2,125m
Net income £m Markets, FX and mix £7m Performance Associates fees and net SPW Group Net new and joint Other Segmental Adjustment Net income FX Mix carried interest income net income Markets business Acquisitions ventures* net income 11 2,124 14 (50) 18 8 2,125 43 (51) 21 9 2,136 290 310 1,801 1,781
Slide 31: Associates and Joint Ventures
Associates and Joint Ventures 2019 2018 SPW1 BoCom Axis Other Total Total Profit (£m)2 3.8 66.5 11.3 16.3 97.9 61.3 Group's share of profit (£m)2 1.9 20.0 2.8 5.8 30.5 19.9 NNB (£bn) 3.8 5.2 0.4 9.4 (0.5) AUM (£bn) 54.6 13.6 1.0 69.2 60.3 1SPW’s AUM is managed by the Group and included in the Group’
Slide 32: Net income up £0.9m to £2,125m
Net income £m Markets, FX and mix £7m Performance Associates fees and net SPW Group Net new and joint Other Segmental Adjustment Net income Markets FX Mix carried interest ventures* income net income net income business Acquisitions 11 2,124 43 14 (50) 18 9 8 2,136 2,125 (51) 21 290 310 1,801 1,781
Slide 33: Operating expenses
Operating expenses £m 1,600 1,460.2 1,498.0 97.5 74.4 1,200 496.3 459.4 800 400 903.3 927.3 0 2018 2019 Compensation costs Non-compensation costs Exceptional items Ratio of total cost to Total compensation ratio net income 44% FY 2018: 43% 67% FY 2018: 64%
Slide 34: Non-compensation costs
Non-compensation costs Average AUM £bn bps 500 12 433.1 441.8 410.8 400 346.6 11.2 307.7 11 300 10.6 10.2 10.3 200 10 100 9.4 0 9 2015 2016 2017 2018 2019 Average AUM Non-compensation costs as bps of average AUM
Slide 35: Change in Group Capital
Change in Group Capital £m Other Gain on partial sale comprehensive of UK WM business Dividends Profit after tax income 153.6 (314.7) 495.7 (69.3) Other (39.0) Closing capital 3,847.5 Opening capital 3,621.2 2018 2019 Group capital up £226.3m to £3,847.5m
Slide 36: Composition of Group Capital
Composition of Group Capital £m 3,848 3,848 4,000 4,000 3,621 3,621 1,007 1,216 3,000 1,164 1,341 3,000 216 216 578 2,000 1,127 535 2,000 408 1,126 148 465 165 1,000 1,000 1,498 1,498 1,115 1,115 0 0 31 December 2018 31 December 2019 31 December 2018 31 December 2019 Capital surplus Overall regulato
Slide 37: Summary
Summary £m 2,123.9 2,124.8 761.2 701.2 2018 2019 2018 2019 Net income1 Profit before tax1 Net income1 Basic EPS1 +£0.9m to £2,124.8m -7% to 201.6p Ratio of total costs to net income1 67% Final dividend of 79p taking total dividend to 114p 1Before exceptional items.
Slide 38: Peter Harrison, Group Chief Executive
Peter Harrison Group Chief Executive
Slide 39: Outlook for 2020 and beyond
Outlook for 2020 and beyond Structural changes to group increasing resilience Increased market volatility likely to continue Focused strategy, global footprint and diversified Wide range of growth opportunities, particularly business model to in Solutions, Private Assets and Wealth deliver long-term
Slide 40: 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