Presentation title here in Arial 36pt...2005 underlying profit adjusted for £20.4mn gain on...

Schroders 2007 Annual Results

Chief Executive

Michael Dobson

4 March 2008

trusted heritage

advanced thinking

1

Overview

Record results

• Strength of international business

• Diversity of product range

• Focus on high margin products

• Growth in Retail

• Repositioning in Institutional

• Transformed profitability in Private Banking

2

Income £1,004.3 million 21% ▲

(2006: £832.3 million)

Profit before tax £392.5 million 35% ▲

(2006: £290.0 million)

Cost: income ratio 61%

(2006: 65%)

Basic earnings per share: 104.8 pence per share 36% ▲

(2006: 76.9 pence per share)

Dividend: 30.0 pence per share 20% ▲


Funds under management £139.1 billion 8% ▲

(2006: £128.5 billion)

Overview

3

£3.8bn China joint venture

Strength of international business

2007 funds under management: Investment by client domicile

China joint venture funds under management are not reported within Group funds under management

North

America

£13.8bn

South

America

£3.4bn

Continental

Europe

£29.8bn

UK

£52.7bn

Asia

Pacific

£36.0bn Middle

East

£3.4bn

• £86.4 billion funds under management

• 70% of total income

4

Strength of international business

• £86.4 billion funds under management

• 70% of total income

• 37 offices in 28 countries

• Investment operations in 16 locations

• 4 in Americas

• 5 in Europe

• 7 in Asia

• New offices in Dubai and Mumbai

• Negotiating to acquire SITE licence in Taiwan

Bermuda Cayman Islands Mexico City New York Philadelphia

Amsterdam Copenhagen Frankfurt Geneva Guernsey Gibraltar Jersey Lisbon London Luxembourg Madrid Milan Paris

Rome Stockholm Vienna Wiesbaden Zurich

Beijing Hong Kong Jakarta Melbourne Mumbai Seoul Shanghai Singapore Sydney Taipei Tokyo

Buenos Aires São Paulo

Dubai

5

Diversity of product range

• Full range of equity products:

• Single country

• Regional

• Multi-regional

• Small and mid-cap

• High alpha

• Defensive

• Relative and absolute return fixed income

• Multi-asset

• Multi-manager

6

Diversity of product range

Alternative FUM £15.9bn • Full range of equity products:

• Single country

• Regional

• Multi-regional

• Small and mid-cap

• High alpha

• Defensive

• Relative and absolute return fixed income

• Multi-asset

• Multi-manager

8.8

2.3

2.2

1.7

0.9

property emerging market debt

funds of hedge funds commodities

private equity funds of funds

7

Focus on high margin products

20

40

60

80

100

120

140

2004 2005 2006 2007

30

40

50

60

70

• Asset Management margins up 30%

since 2004

• Growth in Retail

• Net inflows of £8.8bn

• New products in Institutional

• Alternatives

• Performance fees

Institutional (lhs) Retail (lhs) margin (rhs)

(bps) FUM (£bn)

Asset Management funds under management and margins

20

40

60

80

100

120

140

2004 2005 2006 2007

30

40

50

60

70

8

Strength of international Retail

• Record sales of retail funds in Asia

• Leading position in rapidly growing

Korean market

• £0.8 billion net inflows in China joint

venture

• Net inflows increasing in US intermediary

business

• Net outflows in Continental Europe

• Performance

• Industry

(2006: 68%)

67%

33%

Retail investment performance

Above peer group 3 years Dec 2007

Below peer group 3 years Dec 2007

9

Result

• No. 2 for net sales in UK

• No. 1 with discretionary managers

• Strong position on key industry

platforms

• Top 5 with financial advisers

Growth in UK Retail

Focus

• Broadening product offering

• Maintaining market share with

discretionary managers

• Growing market share in advisory

• Developing sub-advised business

10

69%

31%

Above benchmark 3 years Dec 2007

Below benchmark 3 years Dec 2007

Repositioning in Institutional

• Focus on new products

• Gross sales up 25% to £11.6bn

• 100 new UK clients in 2007

• Fourth year of increasing income

• Net outflows £10.6 billion

• Positive net notified inflows

• Improved investment performance

Institutional investment performance

(2006: 60%)

11

Transformed profitability in Private Banking

• Turnaround complete

• Growing income, containing costs

• Focus on net new assets, revenue

growth

• In the right jurisdictions

• Completely client focussed

• Access to traditional and alternative

products

• First class execution, administration

and IT

• Good environment for private bankers

and clients

2005 underlying profit adjusted for £0.3mn gain on discontinued outsourcing project

41.3

26.9

6.0

20

40

60

80

100

120

2005 2006 2007

0

10

20

30

40

50

PBT (£mn) Income (lhs) Costs (lhs)

£mn

41.3

26.9

6.0 20

40

60

80

100

120

2005 2006 2007

Schroders 2007 Annual Results

Chief Financial Officer

Stephen Brooks

4 March 2008

13

Continued progress across all business segments

Group profit before tax £392.5 million 35% ▲

(2006: £290.0 million)

Asset Management profit before tax £266.5 million 22% ▲

(2006: £219.0 million)

Private Banking profit before tax £41.3 million 54% ▲

(2006: £26.9 million)

Private Equity and Group profit before tax £84.7 million 92% ▲

(2006: £44.1 million)

Funds under management £139.1 billion 8% ▲

(2006: £128.5 billion)

Dividend 30.0 pence per share 20% ▲


14

392.5

230.3

290.0

PBT (£mn)

0

200

400

600

800

1000

1200

2005 2006 2007

Group financial performance


Costs (lhs) Income (lhs)

Total income £1,004.3mn ▲21%

£mn

Costs £611.8mn ▲13%

392.5

230.3

290.0

0

200

400

600

800

1000

1200

2005 2006 2007

0

100

200

300

400

Continued income growth

15

£mn % 2007 2006

Revenue 1,191.8 967.2

Cost of sales (232.4) (169.0)

Gross profit +20 959.4 798.2

Administrative expenses (611.8) (542.3)

Operating profit +36 347.6 255.9

Net finance income 22.6 18.7

Associates and joint ventures 22.3 15.4

Profit before tax +35 392.5 290.0

Tax (88.8) (68.1)

Effective tax rate (%) 22.6 23.5

Profit after tax 303.7 221.9

Basic earnings per share +36 104.8p 76.9p

Group income statement Strong financial performance

16

£mn % 2007 2006

Revenue 1,191.8 967.2

Cost of sales (232.4) (169.0)

Gross profit +20 959.4 798.2






Tax (88.8) (68.1)




Gross profit margins (bps)

54 59

64

2005 2006 2007


17

£mn % 2007 2006

Revenue 1,191.8 967.2

Cost of sales (232.4) (169.0)

Gross profit +20 959.4 798.2






Tax (88.8) (68.1)




2005 underlying figures adjusted for £20.4mn gain on discontinued outsourcing project

Group cost: income ratio (%)

68 65

61

2005 2006 2007


18

£mn % 2007 2006

Revenue 1,191.8 967.2

Cost of sales (232.4) (169.0)

Gross profit +20 959.4 798.2






Tax (88.8) (68.1)




Compensation costs: operating revenues ratio (%)

51

47 46

2005 2006 2007


19

Key drivers

• Compensation costs: operating revenue ratio reduced to 46%

• Increased marketing and brand expenditure

• Investment in key infrastructure projects

£mn % of total 2007 2006

Staff costs 66 403.1 345.2

Other costs 33 200.0 189.6

Depreciation and amortisation 1 8.7 7.5

Total 100 611.8 542.3

No of employees (year-end) 2,891 2,675

Group costs Administrative expenses

20

Marketing spend (£mn)

14.5

19.9

27.9

2005 2006 2007

Project spend (£mn)

30.2

24.7

29.1

33.4

27.9

47.3

2005 2006 2007

Income statement Cash spend

Group costs Marketing and project expenditure

21

£mn % 2007 2006

Revenue 1,191.8 967.2

Cost of sales (232.4) (169.0)

Gross profit +20 959.4 798.2






Tax (88.8) (68.1)





Segmental results

23

PBT (£mn)

173.8

266.5

219.0


Income (lhs)

Asset Management (£mn)

0

200

400

600

800

2005 2006 2007

Costs (lhs)

Asset Management (£ million)

173.8

266.5

219.0

0

200

400

600

800

2005 2006 2007

0

100

200

300


51

55

61

2005 2006 2007

Total income £785.4 mn ▲20%

Costs £518.9 mn ▲19%


51

55

60

2005 2006 2007

Asset Management Continued income growth

24

Gross margins (bps)

35 38 41

8589 91

2005 2006 2007

Income (£mn)

259.4

302.9 330.8

288.4

352.7

454.6

2005 2006 2007

Institutional Retail

Asset Management Income growth in Institutional and Retail channels

25

Private Banking


41.3

26.9

6.0 20

40

60

80

100

120

2005 2006 2007

Costs £64.6 mn ▼ 6%

Total income £105.9 mn ▲ 11%

41.3

26.9

6.020

40

60

80

100

120

2005 2006 2007

0

10

20

30

40

50

PBT (£mn) Income (lhs) Costs (lhs)

£mn

26

Private Equity and Group

£mn 2007 2006 2005

Total Private Equity

investments 138.1 168.2 161.7

of which

Unrealised profit

within reserves*

74.5 102.4 76.2

* Unrealised profit represents the revaluation on Private Equity investments classified under

IFRS as available-for-sale

Profit before tax (£mn)

84.7

58.5

26.2

44.1

34.6

9.5

50.5

40.3

10.2

2005 2006 2007

Private Equity Group

27

£mn 31 Dec 2007 31 Dec 2006

Regulatory and working capital 716.1 654.4

Liquid funds 371.0 311.8

Third party hedge funds 208.2 138.4

Other Schroders funds 262.3 163.7

Private Equity 138.1 168.2

Leasing - 6.9

Shareholders’ equity 1,695.7 1,443.4

Capital allocation

Outlook

29

Outlook

• Investment performance holding up well

• Inflows in specialist products

• Challenging market environment to continue

• Two thirds of cost base linked to revenues

• Additional flexibility in non-compensation costs

• Continuing to invest for future growth

• 2008 result YTD reflects diversity of product range

30

Forward-Looking Statements

These presentation slides contain certain forward-looking statements and forecasts

with respect to the financial condition and results of the businesses of Schroders plc

These statements and forecasts involve risk and uncertainty because they relate to

events and depend upon circumstances that may occur in the future

There are a number of factors that could cause actual results or developments to differ

materially from those expressed or implied by those forward-looking statements and

forecasts. Nothing in this presentation should be construed as a profit forecast

Presentation title here in Arial 36pt...2005 underlying profit adjusted for £20.4mn gain on...

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