Annual results 2018 Presentation 7 March Peter Harrison Group Chief Executive

Size: px

Start display at page:

Download "Annual results 2018 Presentation 7 March Peter Harrison Group Chief Executive"

Leonard Curtis
5 years ago
Views:

1 Annual results 218 Presentation 7 March 219 Peter Harrison Group Chief Executive

Resilient results with strategic progress Peter Harrison Group Chief Executive 1 Annual Results 218 Year of strategically critical initiatives

2 Resilient results with strategic progress Peter Harrison Group Chief Executive 1 Annual Results 218 Year of strategically critical initiatives Revenue growth while investing back into the business Growth in key areas of investment Business model evolving to meet changing client demand

3 Change Net income 1 2,123.9m 2,68.9m 3% Ratio of total costs to net income 64% 61% Profit before tax m 8.3m (5)% AUMA 421.4bn 447.bn (6)% Net new business (9.5)bn 9.6bn Basic EPS p 226.9p (5)% Total dividend per share 114p 113p Peter Harrison Group Chief Executive Year of strategically critical initiatives Revenue growth while investing back into the business Growth in key areas of investment Business model evolving to meet changing client demand 1 Before exceptional items. 2 Annual Results 218

4 Pre-exceptional profit before tax ( m) Peter Harrison Group Chief Executive Year of strategically critical initiatives Revenue growth while investing back into the business Growth in key areas of investment Business model evolving to meet changing client demand 3 Annual Results 218

Net flows by channel bn 15 Section 1 1 5 (5) (1) (15) 213 214¹ 215 216 217 218 Institutional Intermediary Wealth 1 Excludes Friends Life mandate win of 12bn in December 214.

5 Net flows by channel bn 15 Section (5) (1) (15) ¹ Institutional Intermediary Wealth 1 Excludes Friends Life mandate win of 12bn in December 214. Weaker markets impacting client demand Risk off across Intermediary Institutional flows dominated by one large client Wealth continued to see strong demand 4 Annual results 218

6 Net flows by region Record inflows in North America Small outflows in Latin America Section 1 bn 4 2 Positive UK flows led by Wealth UK Institutional led by 5.5bn Multi-asset net flows (2) (4) (6) Challenging markets across channels and countries in Europe Institutional demand for Private Assets (8) Americas UK EMEA Asia Pacific Good underlying growth in core Asian markets Outflows from one large Japanese client and Australian Institutional 5 Annual results 218

7 Net flows by asset class Ongoing demand for Multi-asset solutions Demand from UK and Asia Pacific Institutional clients Section 1 bn bn net flows in Private Assets, all regions net positive Diversified across strategies, led by Private Equity and Securitised Credit (2) Continued turnaround across Wealth Positive flows from Benchmark Capital and Schroder Wealth (4) (6) (8) (1) Multi-asset Private Assets & Alternatives Wealth Fixed Income Equities Fixed income outflows dominated by one client Risk off led to lack of demand for developed markets equities Redemptions primarily from US strategies Partly offset by flows into Asian and EM strategies 6 Annual results 218

8 Richard Keers Chief Financial Officer

9 Profit before tax and exceptional items m Profit before tax and exceptional items Net income Compensation costs Non-compensation costs 55. (22.) (72.1) Wealth Wealth Profit before tax and exceptional items Exceptional items (111.3) Asset 75.9 Asset 67.8 Profit before tax Group segment 4.1 Group segment (3.) Profit before tax and exceptional items -5% 761.2m to 8 Annual Results 218

10 Net income m Net operating revenue + 61m Net income 2, Markets 28 Wealth Markets and FX + m FX (28) Net new business 41 Other operating revenue 44 Acquisitions + 72m Performance fees and carried interest - 24m Carried interest 28 Performance fees (52) Other income (6) Wealth Net income 2, Asset 1,758 Asset 1,81 Group segment 38 Group segment Net income +3% 2,123.9m to 9 Annual Results 218

11 Net operating revenue m 2, 1,5 1, 5 2,1.2 2, , , ,15.7 1, (2) (4) (6) (8) (1) Net new business and annualised net new revenue (NNB and ANNR) NNB bn Net new business Annualised net new revenue Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ANNR m (3) (6) (9) Performance fees Net carried interest Average AUM bn Net operating revenue margin1 47bps 1 Excluding performance fees and carried interest Annualised revenue impact of flows over two years + 3m 1 Annual Results 218

12 Wealth net operating revenue m Net new business and annualised net new revenue (NNB and ANNR) NNB bn Net new business Annualised net new revenue ANNR m (.2) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (2) fees Net banking interest income Transaction fees Performance fees Net operating revenue +6% Net operating revenue margin 1 61bps 1 Excluding performance fees Closing AUM of 43.7bn 11 Annual Results 218

13 Intermediary net operating revenue m 1, (2) (4) (6) Net new business and annualised net new revenue (NNB and ANNR) NNB bn Net new business Annualised net new revenue ANNR m (2) (4) (8) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (6) Performance fees Average AUM + 4.7bn Net operating revenue margin 1 72bps 1 Excluding performance fees Closing AUM of 121.2bn 12 Annual Results 218

14 Institutional net operating revenue m 1, Net new business and annualised net new revenue (NNB and ANNR) NNB bn Net new business Annualised net new revenue ANNR m (2) (4) (6) (5) (1) (15) (8) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (2) Performance fees Net carried interest Average AUM bn Net operating revenue margin 1 31bps 1 Excluding performance fees and carried interest Closing AUM of 242.3bn 13 Annual Results 218

15 Carried interest Return Total return Net carried interest 28.4m Represents 1% of net operating revenue Year Investor return Catch-up phase Shared return Preferred return ( hurdle ) 74 Investment vehicles with carried interest arrangements 9 Investment vehicles have recognised carried interest income 1 years Approximate weighted average age of investment vehicles where carried interest has been recognised 15 years Typical age at which an investment vehicle would be liquidated 34 Investment vehicles contributing to the cost of financial obligations in relation to carried interest 14 Annual Results 218

16 Operating expenses Total compensation ratio 43% 217: 43% m 1,6 1,4 1,2 1, 1, , [X] 6 1, ,362.7 Ratio of total cost to net income 64% 217: 61% Compensation costs Non-compensation costs Exceptional items 15 Annual Results 218

17 Group Capital m 4, 3,471 3,621 3,471 3,621 4, 3, 1,165 1,164 1,9 1,341 3, Capital surplus Dividend¹ Overall regulatory capital requirement 2, 1, ,126 1,146 1, ,146 1,115 2, 1, Working capital Other Working capital Seed and co-investment Investment capital Liquid Investment capital Illiquid Other items² 31 December December December December 218 Other items 2 Capital base Capital allocation 1 Final dividend proposed for respective year 2 Comprises regulatory deductions, principally goodwill, intangible assets and pension scheme surplus 16 Annual Results 218

Summary Net income 1 +3% to 2,123.9m m 2,68.9 2,123.9 Ratio of total costs to net income 64% Profit before tax and exceptional items -5% to 761.2m 8.3 761.

18 Summary Net income 1 +3% to 2,123.9m m 2,68.9 2,123.9 Ratio of total costs to net income 64% Profit before tax and exceptional items -5% to 761.2m Basic EPS before exceptional items -5% to 215.8p Net income 1 1 Before exceptional items Profit before tax and exceptional items Total dividend +1p to 114p 17 Annual Results 218

19 Peter Harrison Group Chief Executive

20 Investing for growth seven key areas Product innovation and Solutions Fixed Income and Multi-asset North America Asia Pacific Technology Private Assets & Alternatives Wealth Increase seed capital GAIA Helix Sustainability Scottish Widows mandate Solutions Strategic capabilities US & Canada Instl. Hartford partnership China Growth in core markets Maybank & WeInvest Alpha generation Client experience Operational efficiency Alternative Sales Unit Algonquin real estate Securitised credit & A1 Adveq private equity Infrastructure Benchmark Capital Lloyds joint venture Thirdrock C.Hoare & Co 19 Annual Results 218

21 Investing for growth seven key areas Expand core business Target client longevity Product innovation and Solutions Fixed Income and Multi-asset North America Asia Pacific Technology Private Assets & Alternatives Wealth Increase seed capital GAIA Helix Sustainability 2 Annual Results 218 Scottish Widows mandate Solutions Strategic capabilities US & Canada Instl. Hartford partnership China Growth in core markets Maybank & WeInvest Alpha generation Client experience Operational efficiency Alternative Sales Unit Algonquin real estate Securitised credit & A1 Adveq private equity Infrastructure Benchmark Capital Lloyds joint venture Thirdrock C.Hoare & Co

22 Investing for growth seven key areas Closer proximity to consumer Expand core business Grow Wealth offering Target client longevity Product innovation and Solutions Fixed Income and Multi-asset North America Asia Pacific Technology Private Assets & Alternatives Wealth Increase seed capital GAIA Helix Sustainability 21 Annual Results 218 Scottish Widows mandate Solutions Strategic capabilities US & Canada Instl. Hartford partnership China Growth in core markets Maybank & WeInvest Alpha generation Client experience Operational efficiency Alternative Sales Unit Algonquin real estate Securitised credit & A1 Adveq private equity Infrastructure Benchmark Capital Lloyds joint venture Thirdrock C.Hoare & Co

23 Investing for growth seven key areas Closer proximity to consumer Expand core business Grow Private Assets and Alternatives Grow Wealth offering Target client longevity Rebalance business towards private markets Product innovation and Solutions Fixed Income and Multi-asset North America Asia Pacific Technology Private Assets & Alternatives Wealth Increase seed capital GAIA Helix Sustainability 22 Annual Results 218 Scottish Widows mandate Solutions Strategic capabilities US & Canada Instl. Hartford partnership China Growth in core markets Maybank & WeInvest Alpha generation Client experience Operational efficiency Alternative Sales Unit Algonquin real estate Securitised credit & A1 Adveq private equity Infrastructure Benchmark Capital Lloyds joint venture Thirdrock C.Hoare & Co

24 Investing for growth seven key areas Closer proximity to consumer Expand core business Grow Private Assets and Alternatives Grow Wealth offering Target client longevity Rebalance business towards private markets Technology Product innovation and Solutions Fixed Income and Multi-asset North America Asia Pacific Technology Private Assets & Alternatives Wealth Increase seed capital GAIA Helix Sustainability 23 Annual Results 218 Scottish Widows mandate Solutions Strategic capabilities US & Canada Instl. Hartford partnership China Growth in core markets Maybank & WeInvest Alpha generation Client experience Operational efficiency Alternative Sales Unit Algonquin real estate Securitised credit & A1 Adveq private equity Infrastructure Benchmark Capital Lloyds joint venture Thirdrock C.Hoare & Co

25 24 Annual Results 218

26 Annual results 218 Outlook Global footprint and diversified business model to drive future growth Peter Harrison Group Chief Executive Challenging market conditions but strong pipeline of new business We remain focused on strategy to reposition business for changing client demand 25 Annual Results 218

27 Thank you 26 Annual Results 218

28 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 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. 27 Annual Results 218

Annual Results 2017 Data pack

Annual Results 2017 Data pack Contents Asset under management and administration (AUMA) 2 Regional diversification of AUM 3 Gross sales and net flows 4-7 Currency profile of AUM 8-9 AUM diversification