Half-year results 2018 Presentation 26 July 2018 Peter Harrison - - PowerPoint PPT Presentation
Half-year results 2018 Presentation 26 July 2018 Peter Harrison Group Chief Executive Delivering growth across the cycle Revenu nue g grow owth a h agai ains nst a a challeng nging ng backd kdrop op Peter Harrison Group Chief
Presentation 26 July 2018
Half-year results 2018
Peter Harrison Group Chief Executive
1 Annual Results 2017
Revenu nue g grow
h agai ains nst a a challeng nging ng backd kdrop
Peter Harrison
Group Chief Executive
Delivering strategy through diversified business model Evolution of business model to meet client demand Strong gross flows and positive net new business Growth in key areas
2 Annual Results 2017
H1 2018 H1 2017 Change
Net income1
£1,086.1m £974.4m 11%
Ratio of total costs to net income1
63% 63% –
Profit before tax1
£397.1m £361.5m 10%
AUMA2
£449.4bn £417.5bn 8%
Net new business
£1.2bn £0.8bn –
Basic EPS1
114.0p 103.5p 10%
Dividend per share
35p 34p 3%
1Before exceptional items. 2 Assets under administration was restated at the Q3 results announcement to exclude assets from which we only derive transactional non-recurring revenuesPeter Harrison
Group Chief Executive
Delivering strategy through diversified business model Evolution of business model to meet client demand Strong gross flows and positive net new business Growth in key areas
3 Half-year results 2018
Net et flows ws by by c channel nel
£bn
Industry headwinds impacting client demand
5 10 15 2013 2014¹ 2015 2016 2017 H1 2018 Institutional Intermediary Wealth Management
1Excludes Friends Life mandate win of £12bn in December 2014.net new business
Strong client demand in Wealth Management
Net inflows in Institutional
Intermediary
4 Half-year results 2018
5 10 15 2013 2014¹ 2015 2016 2017 H1 2018 Equities Fixed Income Multi-asset Private Assets & Alternatives Wealth Management
Net et flows ws by by a asset c et class
1Excludes Friends Life mandate win of £12bn in December 2014.Encouraging growth in Private Assets & Alternatives Equity outflows driven by client restructuring Continued strong Multi-asset demand
net inflows
net inflows Demand for outcome-
and uncorrelated returns £bn
5 Half-year results 2018
Net et flows ws by by r reg egion
NNB across North and Latin America
Positive UK net inflows, despite outflows from large UK insurance client
Positive net new business in most regions
Asia Pacific flat, due to Australian redemptions
5 10 15 2013 2014¹ 2015 2016 2017 H1 2018 UK EMEA Asia Pacific Americas
1Excludes Friends Life mandate win of £12bn in December 2014.£bn
Richard Keers Chief Financial Officer
7 Half-year results 2018
Group segment 5.4 Group segment 1.0 Profit after tax and exceptional items 292.6 Asset Management 310.6 Asset Management 347.4 Net income Compensation costs Non-compensation costs Tax Exceptional items
H1 - 17 H1 - 18 H1 - 18
Profit bef t before t e tax a and ex excepti eptiona nal i item ems
Profit before tax and exceptional items up
H1 2018 H1 2018 H1 2017 Profit after tax and before exceptional items 315.7 Profit before tax and exceptional items 361.5 Profit before tax and exceptional items 397.1
£m
to
45.5 111.7 (43.7) (32.4) 48.7 (81.4) (23.1) Wealth Management Wealth Management
8 Half-year results 2018
Net operating revenue +£111m
Group segment 20 Asset Management 820 Asset Management 921 Wealth Management Wealth Management
H1 - 2017 H1 - 2018
Group segment 21
Net in inco come
Net income 1,086
H1 2017
Net income 974
H1 2018
Other income 1 Performance fees 2 Carried interest 20 FX (30) Markets 50 Net new business 40 Other
revenue 29 144
Net income up 11%
to
£m
134 Acquisitions +£49m Markets and FX +£20m
9 Half-year results 2018
Average AUM up
Insti titu tuti tiona nal n net et o
perating ng r rev evenu enue
(0.7) (0.6) (3.5) 5.0 (0.7) 11.5 (1.6) 5.3
5 10 15 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 359.6 396.8 397.1 13.2 44.4 15.8 19.6 100 200 300 400 500 Performance fees Carried interest H1 2017 H2 2017 H1 2018
Annualised revenue on net new business
£m
Closing AUM of
from H1 2017
372.8 441.2 432.5 £m 2016 2017 2018
Net operating revenue margin1
(FY 2017: 32bps)
1Excluding performance fees and carried interest 10 Half-year results 2018
436.5 472.9 478.6 19.9 436.5 492.8 478.6 100 200 300 400 500 Performance fees H1 2017 H2 2017 H1 2018
Inter termed ediary n net et o
perating r rev even enue
1.4 (8.9) 19.9 (1.8) 18.6 6.6 12.8 (13.3)
10 20 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Annualised revenue on net new business
£m £m
Closing AUM of
2016 2017 2018
Average AUM up
from H1 2017 Net operating revenue margin1
(FY 2017: 72bps)
1Excluding performance fees 11 Half-year results 2018
Wea ealth Ma th Managem ement n t net et o
perati ting ng r rev even enue
Annualised revenue on net new business
98.6 105.2 106.2 21.0 19.8 20.6 10.6 10.8 12.8 0.6 0.3 0.3 130.8 136.1 139.9 20 40 60 80 100 120 140 H1 2017 H2 2017 H1 2018 Management fees Transaction fees Net banking interest income Performance fees 0.1 (1.1) (0.5) 2.7 1.4 3.7 1.6 5.0
0.0 2.5 5.0 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Net operating revenue up
Closing AUM of
from H1 2017
£m £m 2016 2017 2018
(FY 2017: 61bps) Net operating revenue margin1
1Excluding performance fees 12 Half-year results 2018
Total compensation ratio
H1 2017: 44.0%
Oper perating ng ex expen penses
Annu Annual Re Results 2 2017
428.3 472.0 184.6 217.0 100 200 300 400 500 600 700 H1 2017 H1 2018 689.0 629.2 706.6
Ratio of total costs to net income
£m 612.9 16.3 17.6 Compensation costs Non-compensation costs Exceptional items
H1 2017: 63%
13 Half-year results 2018
Group C Capi pita tal
12017 final dividend/2018 interim dividend proposed 2Comprises goodwill, intangible assets, pension scheme surplus, other associates and joint ventures, and deferred tax. 3Includes RWC Partners Limited and Schroder Ventures Investment Limited associates.1,146 1,311 944 976 216 96 1,165 1,139 1,000 2,000 3,000 4,000 31 December 2017 30 June 2018 Capital base Capital surplus Dividend¹ Overall regulatory capital requirement Other items² 1,146 1,311 147 149 696 565 392 580 1,090 917 1,000 2,000 3,000 4,000 31 December 2017 30 June 2018 Capital allocation 3,522 3,471 3,471 3,522 Working capital – Other Working capital – Seed and co-investment Investment capital – Liquid Investment capital – Illiquid3 Other items2 £m £m
14 Half-year results 2018
Summar mary
A growing business delivering on strategy
Net income up
11% to £1,086.1m
Ratio of total costs to net income
63%
Profit before tax and exceptional items up
10% to £397.1m
Basic EPS up
Interim dividend up
974.4 [ 361.5 Profit before tax and exceptional items Net income H1 2017 H1 2018 H1 2017 H1 2018 1,086.1 397.1 £m
All figures quoted are before exceptional items
Peter Harrison Group Chief Executive
16 Half-year results 2018
North America Asia Pacific Technology Private Assets & Alternatives Wealth Management Product innovation and Solutions Fixed Income and Multi-asset
Key ey a area eas o
tegic g growth th
Inve vesting i in fut uture gro rowth dri rivers
17 Half-year results 2018
Conti tinu nued ed m momen entum i in North th Amer erica
Strong client demand in key strategic area
net inflows from Institutional clients Hartford range
AUM
net inflows from Canada
0.0 2.0 4.0 6.0 2012 2013 2014 2015 2016 2017 H1 2018 Institutional Intermediary branded Intermediary sub-advised £bn
18 Half-year results 2018
Gro Growth in in Priv rivate A Assets & & Alt lternativ ives
assets under management
Expanding investment expertise
Client demand in first half of
19 Half-year results 2018
Continued organic growth
Wea ealth Ma th Managem ement
Strong financial performance Diversified client base driving net inflows Reinforced management team
Growt wth through i invest stme ment i t in key op y opportuni nitie ies
Continued evolution of business towards areas of client demand Delivering strategy through diversified business model Driving revenue growth through investment in key strategic areas
21 Half-year results 2018
22
Fo Forward l looking ng s state tements nts
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 are based on current expectations and assumptions but relate to events and depend upon circumstances in the future and you should not place reliance on them. Without limitation, any statements preceded or followed by or that include the words ‘targets’, ‘plans’, ‘sees’, ‘believes’, ‘expects’, ‘aims’, ‘confident’, ‘will have’, ‘will be’, ‘will ensure’, ‘likely’, ‘estimates’ or ‘anticipates’ or the negative of these terms or other similar terms are intended to identify such forward-looking statements. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward- looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors’ current view and information known to them at the date of this statement. The Directors do not make any undertaking to update
Nothing in these presentation slides should be construed as a forecast, estimate or projection of future financial performance.