Press Releases

Schroders plc - Half-year results to 30 June 2014

31/07/2014

Profit before tax up 6 per cent. to £233.9 million (H1 2013: £221.7 million)

Net inflows £4.8 billion (H1 2013: 4.5 billion)

Assets under management up 15 per cent. to £271.5 billion (30 June 2013: £235.7 billion) 

Interim dividend up 50 per cent. to 24.0 pence per share (interim dividend 2013: 16.0 pence per share) 

  Six months ended
30 June 2014
£m
Six months ended
30 June 2013
£m
Year ended
31 December 2013
£m

Profit before tax and exceptional items
Asset Management
Wealth Management
Group segment

 
235.1
26.3
0.1

212.1
10.6
5.3
 

468.6
34.3
4.9
Profit before tax and exceptional items  261.5 228.0  507.8
Profit before tax 233.9  221.7  447.5 
Earnings per share before exeptional items (pence) 77.1  66.3  149.9 
Earnings per share (pence) 69.0  64.2  130.6 
Dividend  24.0 16.0  58.0 

Michael Dobson, Chief Executive, commented: "Schroders achieved record results in the first half of 2014. We have seen good inflows in July and we have a significant pipeline of business we have won in institutional which has not yet been funded. Our focus on delivering long-term value for shareholders is reflected in the 50 per cent. increase in the interim dividend."

Contacts:

Investors Wayne Mepham +44 (0) 207 658 6301
wayne.mepham@schroders.com
Media Anita Scott +44 (0) 207 404 5959
schroders@brunswickgroup.com

Management report

Against a background of quieter markets and some slowdown in investor demand following the strong performance of 2013, Schroders produced satisfactory results in the first half of 2014. Net revenue was up 13 per cent. to £728.6 million (H1 2013: £645.1 million) and profit before tax and exceptional items was up 15 per cent. to £261.5 million (H1 2013: £228.0 million). The strength of sterling over the past twelve months had an adverse impact on profit before tax of approximately £18.0 million.

Net inflows were £4.8 billion taking assets under management at the end of June to a record £271.5 billion (30 June 2013: £235.7 billion).

Asset Management

Asset Management net revenue increased 6 per cent. to £621.0 million (H1 2013: £585.7 million) and included performance fees of £8.3 million (H1 2013: £11.8 million). Net revenue margins, excluding performance fees, were 52 basis points (2013: 53 basis points). Profit before tax and exceptional items increased 11 per cent. to £235.1 million (H1 2013: £212.1 million). Exceptional items, principally the amortisation of the value of client relationships acquired with Cazenove Capital and STW, were £9.6 million (H1 2013: £0.3 million).

Investment performance remains competitive with 72 per cent. of assets under management outperforming their benchmark or peer group over three years.

Net inflows in Institutional were £0.7 billion, with small net outflows in the second quarter principally due to outflows in Commodities which reflected a challenging environment for this asset class. Assets under management in Institutional at the end of June were £148.0 billion (30 June 2013: £139.6 billion).

Net inflows in Intermediary were £3.8 billion, predominantly into branded funds and concentrated in Multi-asset and Equities. Assets under management in Intermediary at the end of June were £92.8 billion (30 June 2013: £79.2 billion).

Wealth Management

Net revenues in Wealth Management increased 88 per cent. to £100.5 million (H1 2013: £53.5 million), reflecting the inclusion of Cazenove Capital, and profit before tax and exceptional items more than doubled to £26.3 million (H1 2013: £10.6 million). Exceptional items of £8.9 million (H1 2013: £nil) included integration costs and the amortisation of client relationships acquired.

The integration of the wealth management business of Cazenove Capital is progressing well and the response from clients has been encouraging. Net inflows in the first half were £0.3 billion. Assets under management in Wealth Management at the end of June were £30.7 billion (30 June 2013: £16.9 billion).

Group

The Group segment comprises central costs and returns on investment capital, including seed capital deployed in building an investment track record in new products. Profit before tax and exceptional items was £0.1 million (H1 2013: £5.3 million). Exceptional items relating to the acquisitions of Cazenove Capital and STW, were £9.1 million (H1 2013: £6.0 million).

Shareholders’ equity at the end of June was £2.3 billion (31 December 2013: £2.3 billion).

Dividend

The Board has declared an interim dividend of 24.0 pence per share (interim dividend 2013: 16.0 pence), an increase of 50 per cent. This is in line with our target of a higher payout ratio and a rebalancing towards the interim dividend following greater increases in the final dividend in recent years. The dividend will be payable on 25 September 2014 to shareholders on the register at 15 August 2014.

Outlook

Although we have generated good levels of Intermediary flows in July, the short-term outlook for retail investor demand is uncertain given no clear trend in markets. In Institutional, we have more visibility with a significant pipeline of new business won but which has not yet been funded. We continue to see a wide range of growth opportunities across our business in the longer term.

Additional information

Assets under management

Six months to 30 June 2014 Insitutional
£bn
Intermediary
£bn
Asset Management
£bn
Wealth Management
£bn
Total
£bn
31 December 2013
Net flows
Investment returns
144.3
0.7
3.0
88.5
3.8
0.5
232.8
4.5
3.5
30.1
0.3
0.3

262.9
4.8
3.8

30 June 2014 148.0 92.8 240.8 30.7 271.5

 

Three months to 30 June 2014 Insitutional
£bn
Intermediary
£bn
Asset Management
£bn
Wealth Management
£bn
Total
£bn
31 March 2014
Net flows
Investment returns
146.3
(0.3)
2.0
91.5
1.0
0.3
237.8
0.7
2.3
30.2
0.3
0.2

268.0
1.0
2.5

30 June 2014 148.0 92.8 240.8 30.7 271.5

Income and cost metrics for the Group

  Six months ended 30 June 2014 Six months ended 30 June 2013 Year ended 31 December 2013
Costs: net revenue ratio
Compensation costs: operating revenue ratio
Bonus: pre-bonus operating profit
Return on average capital before exceptional items (pre-tax)
Return on average capital before exceptional items (post-tax)
66%
47%
39%
23%
18.%

 66%
48%
40%
21%
17%

65%
46%
39%
23%
19% 

Copies of today's announcement are available on the Schroders website: www.schroders.com. Michael Dobson, Chief Executive, and Richard Keers, Chief Financial Officer, will host a presentation and webcast for the investment community, to discuss the Group’s half-year results at 9.00am BST on Thursday, 31 July 2014 at 31 Gresham Street, London, EC2V 7QA. The webcast can be viewed live at www.schroders.com/ir and www.cantos.com. For individuals unable to participate in the live webcast, a replay will be available from midday on Thursday, 31 July on www.schroders.com/ir.

Read the full report

Schroders plc - Half-year results to 30 June 2014 28 pages | 157 kb

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