935044 final interim slides - for web · h1 2007 h2 2007 h1 2008 h2 2008 h1 2009 h2 2009 h1 2010...
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Schroders2010 Interim Results
Michael DobsonChief Executive
5 August 2010
trusted heritageadvanced thinking
H1 2010 overview
• Net new business £16.1bn (H1 2009: £1.8bn)
• Funds under management £164.0bn (31 Dec 2009: £148.4bn)
• Profit before tax £188.2m (H1 2009: £76.9m*)
• Earnings per share 49.4p (H1 2009: 7.0p)
• Dividend 11.0p per share (H1 2009: 10.0p)
* Before exceptional items
H1 2010
• Client led
• Broad product range
• Strong distribution capability
• International diversification
• Financial strength
Net inflows: £16.1bn
26%
74%
Above benchmark or peer groupBelow benchmark or peer group
Delivering for clients 3 year1 yearQuartile rankings 30 June 2010
Source: Schroders. Performance relative to benchmark or peer group to 30 June 2010
37%
63%
Outperformanceover 1 year
over 3 years
11Euro Bond
14Euro Corporate Bond
21Japan Equity Alpha
11US Small & Mid Cap12European Alpha Plus
12European Special Situations
11UK Alpha Plus
11UK Income
11UK Income Maximiser
12Global Corporate Bond
11QEP Global Active Value
24Emerging Market Equities
12Global Equity Alpha11Emerging Market Debt
13Commodities
Broad product rangeNet sales by asset class: H1 2010
Equities Fixed IncomeAlternatives Multi-asset
Institutional Intermediary
42%
24%
20%
14% 9%
60%
24%
7%
Asset Management - £bn
* Gross flows before netting
Strong distribution capabilityIncreasing gross sales
0
10
20
30
40
H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010
Equities Fixed IncomeAlternatives Multi-asset
£5.1bn China joint venture
* China joint venture funds under management are not reported within Group funds under management
NorthAmerica£16.8bn
South America£4.6bn
ContinentalEurope£39.9bn
UK£57.4bn Asia
Pacific £47.3bn*
MiddleEast
£3.1bn
FUM by client domicile
International diversification69% of revenues outside UK
InstitutionalFunds under management £87.3bn
9.8
16.3
11.6 11.7
18.5
-6.5
-22.2
-15.5-13.6
4.9
-3.8
-10.6
-25
-20
-15
-10
-5
0
5
10
15
20
2007 2008 2009 H1 2010
Gross sales Gross outflows Net inflows
£bn
• Significant increase in new business
• Traditional and new products
• Progress with official institutions and insurance companies
• Increasing client longevity
21.1
41.0
23.3
29.0
-16.0
-32.2-29.5
-19.4
5.19.6
-6.2
8.8
-40
-30
-20
-10
0
10
20
30
40
50
2007 2008 2009 H1 2010
Gross sales Gross outflows Net inflows
IntermediaryFunds under management £62.7bn
£bn
• All-weather product range
• Developing absolute return and income products
• Over 1,800 distributor relationships
• Building out US Intermediary business
IntermediaryFunds under management £62.7bn
3.3 1.810.810.3
41.0
23.3
29.0
-9.0-7.0
-32.2-29.5
-19.4
9.6
-6.2
8.8
-40
-30
-20
-10
0
10
20
30
40
50
2007 2008 2009 Q1 2010 Q2 2010
Gross sales Gross outflows Net inflows
£bn
• All-weather product range
• Developing absolute return and income products
• Over 1,800 distributor relationships
• Building out US Intermediary business
Private BankingFunds under management £14.0bn
• Net new business £1.2bn
• 27% increase in management fee income
• Decline in interest income
• Higher operating costs
– recruitment
– doubtful debt provision
• Underlying momentum
Schroders2010 Interim Results
Kevin ParryChief Financial Officer
5 August 2010
9.0 10.0 10.0 11.0
Interim dividend per share (pence)
Key figures
4745
4846
Compensation costs: operating revenues ratio (%)
49.0
35.8
7.0
49.4Basic earnings per share (pence)
185.6 173.3
76.9
188.2Profit before tax* (£m)
H1 2008 H1 2009 H1 2010H1 2007 H1 2008 H1 2009 H1 2010H1 2007
H1 2008 H1 2009 H1 2010H1 2007 H1 2008 H1 2009 H1 2010H1 2007
* Before exceptional items Group segment PBT before exceptional items
Profit before tax (£m)
0
50
100
150
200
250
300
Profit before taxSignificant increase in net revenue
PBT H1 2010£188m
Netrevenue£205m
£m
PBTH1 2009£36m PBT
H1 2009£77m
Exceptional items£41m
0
100
200
300
400
500
600
Significant increase in net revenue
Netrevenue H1 2009
£332m
NetrevenueH1 2010
£537m
Net newbusiness
£83m
Performancefees £30m
Group £6m
£m
Before exceptional items
Markets & FX£73m
Margin£13m
0
50
100
150
200
250
300
Profit before taxCost control continues
PBT H1 2009
£77m
PBTH1 2010£188m
Netrevenue£205m
OtherCosts£13m
Net financeIncome
£4m
JVs andAssociates
£5m
£m
Comp.Costs£82m
Compensation costs:operating revenue reduced from 49% (FY09)
to 46% (H1 10)
Before exceptional items
£m
205
112
174165
272
228
H1 2009 H2 2009 H1 2010
Institutional and Intermediary net revenues
Institutional Intermediary
60bps60bps57bps
H1 2009 H2 2009 H1 2010
Asset Management net revenue marginsexcluding performance fees
Performance fees
Private Banking segment£m - net revenue
13.612.1 11.8
28.6
24.1
30.5
7.8 7.611.5
H1 2009 H2 2009 H1 2010
Management fees Net interest income
49.2 48.5 49.9
Transaction fees
£m - costs
17.0
27.3 24.8
4.3
2.0 4.713.4
13.6 13.8
H1 2009 H2 2009 H1 2010
Compensation costs Other costs Doubtful debt provisions
34.7
42.9 43.3
66%
46%
363.7
10.3
111.0
242.4
H1-10
-2%50%48%Compensation cost: operating revenue ratio
-12%74%78%Cost:income ratio
+35%
+24%
+11%
+51%
H1 10 vs H1 09
346.3
8.7
107.6
230.0
H2-09
99.8Other costs
8.3Depreciation and amortisation
268.8
160.7
H1-09£m
Staff costs
Total
Operating expenses before exceptional items
49.4p
140.7
25%
(47.5)
188.2
H1 2010
H1 2009
(17.6)3.1(20.7)Tax
48%8%27%Effective tax rate(%)
18.7(37.5)56.2Profit after tax
7.0p(13.3)p20.3pBasic earnings per share
36.3(40.6)76.9Profit before tax
Exceptional items
Before exceptional
items Total
£m
Tax charge and earnings per shareBenefit of higher profitability
918635707Sub-total
1,059771867Group capital
141136160Seed capital
1,6491,4971,594Statutory Group capital
590726727Asset Management & Private Banking operational capital
2063263Other investments
92
352
June 2010
90
808
Dec 2009
504Cash investments
68
June 2009£m
Investment capital:
Private Equity
Group capital allocation
0
100
200
300
400
500
600
700
800
900
Movement in Group cash balances
Groupcash
Dec ’09
£808m
Dividend£58m
SharePurchases
£143mPension
Contribution£58m
Re-allocation of
Investmentcapital£194m
Other£3m
Groupcash
Jun’10
£352m
Outlook
Michael DobsonChief Executive
Outlook
• Institutional well positioned
– potential reduction in revenue margins offset by increased longevity
• Intermediary dependent on investor demand
– broadly diversified
• Private Banking new business momentum
• Range of long term growth opportunities
Forward-Looking Statements
These presentation slides may contain forward-looking statements with respect to the financial condition and results of the operations and 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. Forward-looking statements and forecasts are based on the Directors’ current view and information known to them at the date of this presentation. 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 this presentation should be construed as a profit forecast