Presentation 1 August 2019 - Schroders · Presentation 1 August 2019 Half-year results 2019. 1...
Transcript of Presentation 1 August 2019 - Schroders · Presentation 1 August 2019 Half-year results 2019. 1...
Peter Harrison Group Chief Executive
Presentation
1 August 2019
Half-year results 2019
Half-year results 20191
Peter HarrisonGroup Chief Executive
Good progress in partnership with Lloyds
Continued investment in growth areas
Subdued investor demand in “risk off” environment
Selective acquisitions aligned to strategic objectives
Strategic focus for long-term growth
Half-year results 20192
Peter HarrisonGroup Chief Executive
Good progress in partnership with Lloyds
Continued investment in growth areas
Subdued investor demand in “risk off” environment
Selective acquisitions aligned to strategic objectives
H1 2019 H1 2018 Change
Net income1 £1,032.6m £1,086.1m (5)%Profit before tax1 £340.4m £397.1m (14)%AUM £444.4bn £435.7bn 2%Net new business £(1.2)bn £1.2bn –Basic EPS1 98.6p 114.0p (14)%Total dividend per share 35.0p 35.0p –
1 Before exceptional items.
Half-year results 20193
Ongoing “risk off” environment across Intermediary
£bn
Continued subdued investor demand
(15)
(10)
(5)
0
5
10
15
2015 2016 2017 2018 H1 2019
Institutional Intermediary Wealth Management
Continued momentum in Wealth Management
Positive net new business from Institutional clients
Net flows by channel
Half-year results 20194
Net flows by region
(3)
(2)
(1)
0
1
2
3
4
UK Asia Pacific Americas EMEA
£bn
Despite macro concerns, positive net flows
Outflows driven by Australian redemptions
Challenging market across both channels
Small Institutional outflows in North and Latin America
Institutional demand for Multi-asset and Fixed Income
Partly offset by clients in mainland China, Singapore & Taiwan
Intermediary outflows concentrated on equity funds
Net inflows into Hartford range, now £5.8bn AUM
UK
Asia Pacific
Americas
EMEA
Half-year results 20195
Net flows by asset classPositive net new business across both channels
Continued demand for Multi-asset strategies
Ongoing momentum in segment
Outflows through one real estate mandate
Institutional flows into US & convertibles, Intermediary for EMD and European credit
Led by UK Institutional clients into LDI and risk mitigation
Positive flows across both Cazenove and Benchmark
Continued demand for securitised credit(8)
(6)
(4)
(2)
0
2
4
Fixed Income Multi-asset WealthManagement
PrivateAssets &
Alternatives
Equities
£bn
Limited demand with “risk off” across both channels
Global and EAFE strategies generated positive flows
Fixed Income
Multi-asset
Wealth Management
Private Assets
Equities
Richard Keers
Chief Financial Officer
6
Half-year results 2019
Profit before tax and exceptional items
7
Profit before tax and exceptional items -14% £340.4mto
Group segment1.0
Group segment4.8
Profit before tax
319.3
AssetManagement
347.4
AssetManagement
292.4
Net income Compensationcosts
Non-compensation costs Exceptional items
(21.1)
H1 - 17 H1 - 18 H1 - 18H1 2019H1 2019H1 2018
Profit before tax and
exceptional items
397.1
Profit before tax and
exceptional items
340.4
£m
48.7
(53.5)18.6 (21.8)
43.2Wealth Management
Wealth Management
Half-year results 2019
Net income
8
Net income -5% £1,033mto
2017 2018
AssetManagement
921
AssetManagement
865
WealthManagement
WealthManagement
Group segment24
Group segment21
Net operating revenue£(58)m
Net income1,033
Net income1,086
Otherincome
5
Performance
fees
(14)
FX11
Markets(42)
Net new business
(23)Acquisitions
4
144
£m
144
Markets and FX£(31)m
Performance fees and net carried interest
£(8)m
H1 2018
Net carried interest
6
H1 2019
Half-year results 2019
Asset Management net operating revenue
9
£m
Closing AUM of
£393.7bnAverage AUM
-£12bn from HY 18
Net operating revenue margin1
44bps1Excluding performance fees and net carried interest
(100)
(80)
(60)
(40)
(20)
0
20
40
60
(10)
(8)
(6)
(4)
(2)
0
2
4
6
Q1 Q2 Q3 Q4 Q1 Q2
Net new businessAnnualised net new revenue 2018 - 2019
NNB£bn
ANNR£m
Net new business and annualised net new revenue(NNB and ANNR)
2018 2019
0100200300400500600700800900
1,000
Performance fees and net carried interest
H1 2018 H2 2018 H1 2019
877.7
875.7 858.5
911.1852.935.4 19.2 27.3
825.6
Half-year results 2019
Wealth Management net operating revenue
10
106.2 110.0 109.3
20.6 17.9 18.312.8 14.0 12.70.3 0.1 0.1
0
20
40
60
80
100
120
140
160
H1 2018 H2 2018 H1 2019
Performance fees Net banking interest incomeTransaction fees Management fees
139.9 142.0 140.4
Average AUM
+£1bn from HY 18
Closing AUM of
£50.7bn
£m
60bpsNet operating revenue margin1
1Excluding performance fees
0
2
4
6
8
10
12
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Q1 Q2 Q3 Q4 Q1 Q2
Net new businessAnnualised net new revenue 2018 - 2019
2018 2019
Net new business and annualised net new revenue(NNB and ANNR)
NNB£bn
ANNR£m
Half-year results 2019
Operating expenses
11
Total compensation ratio
44.0%H1 2018: 43.5%
Ratio of total cost to net income
67%H1 2018: 63%
472.0 453.4
217.0 238.8
0
100
200
300
400
500
600
700
800
H1 2018 H1 2019
692.2
706.6
[X]
689.0
17.6711.3
19.1
Compensation costs
Non-compensation costs
Exceptional items
£m
Half-year results 2019
Group capital
12
1,115 1,154
1,126 1,084
216 96
1,164 1,242
0
1,000
2,000
3,000
4,000
31 December2018
30 June2019
Capital base
1Final 2018 dividend/proposed 2019 interim dividend2Comprises regulatory deductions, principally goodwill, intangible assets and pension scheme surplus
1,115 1,154
165 176 465 474
535 567
1,341 1,205
0
1,000
2,000
3,000
4,000
31 December2018
30 June2019
Capital allocation
3,576 3,6213,621 3,576
Working capital – Other Working capital – Seed and co-investmentInvestment capital – LiquidInvestment capital – IlliquidOther items2
£m
Other items2
Overall regulatory capital requirement
Dividend1
Capital surplus
Half-year results 201913
SummaryNet income1
-5% to £1,032.6m
Profit before tax and exceptional items
-14% to £340.4m
Interim dividend unchanged at
35.0p
Basic EPS before exceptional items
-14% to 98.6p
£m
1Before exceptional items.
1,086.11,032.6
397.1340.4
Profit before tax and exceptional items
Net income1
H1 2018 H1 2019H1 2018 H1 2019
Peter Harrison Group Chief Executive
Half-year results 201915
Developments to reinforce long-term strategy
Expand core business
Scottish Widows mandate
Grow Private Assets & Alternatives
Real Estate: Blue Asset Management
Impact investing:BlueOrchard
Thirdrock
Closer proximity to consumer
Schroders Personal Wealth Progress in China
Half-year results 201916
OutlookFocused strategy for long-term growth
Strong pipeline despite environment of limited investor demand
Progress against strategic objectives to drive future growth
Half-year results 2019
Forward looking statements
17
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 or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Nothing in these presentation slides should be construed as a forecast, estimate or projection of future financial performance.